Korea's reshoring push through RIA struggles as overseas stock investors reluctant to bring capital home

Finance Minister Koo Yun-cheol speaks during a briefing on reshoring investment account products at the headquarters of NH Investment & Securities in Seoul, Friday. Joint Press Corps

When brokerages rolled out tax-incentivized reshoring investment accounts (RIA) on March 23 as part of the government’s push to lure overseas stock investments back home, a 60-year-old business owner surnamed Park paused to consider his next move.

Park, who has put more than 40 million won ($33,200) into U.S. equities, weighed the option, but ultimately decided not to open an account.

“U.S. stocks have taken a hit after the Middle East conflict, which makes this a buying opportunity,” he said. “Rather than giving that up and shifting funds now, I think it’s better to wait for the market to recover.”

According to the Korea Financial Investment Association, RIA accounts opened through 23 domestic brokerages totaled 91,923 as of Thursday. Securities firms have been offering fee waivers and cash incentives in a scramble to attract users, helping drive a surge in sign-ups within just 10 days.

But the money hasn’t followed at the same pace.

Total assets flowing through RIAs stood at 482.6 billion won, a mere 0.2 percent of the 223 trillion won held by Korean investors in foreign equities.

Park acknowledged that with the Korean won so weak against the dollar, it may be tempting to sell overseas stocks and bring the money back.

“But if you hold onto U.S. stocks, there’s still upside potential, especially when markets rebound sharply after the war. Stocks can jump quickly like that, whereas exchange rates tend to be less prone to such sudden moves.”

So, for Park, the conclusion is simple: there’s no urgency. If anything, he would rather wait for his U.S. holdings to rise further before bringing offshore funds home, instead of rushing into a reshoring account now.

Jung, a 30-year-old office worker in Seoul, echoed that hesitation.

“A big reason is the lack of trust in the domestic market. Even though Korean stocks have rallied recently, U.S. markets have shown much more consistent long-term growth,” she said. “If I had to, I’d rather add money to my domestic portfolio directly than pull funds out of my overseas investments just to reallocate them here.”

Both investors said the tax incentives offered under RIAs are not compelling enough to justify the move.

Under the scheme, investors who transfer overseas holdings into a dedicated account and reinvest the proceeds in domestic stocks or funds for at least one year can receive full or partial exemptions on the 22 percent capital gains tax — applicable to gains of up to 50 million won.

“If the tax benefits were truly substantial, I might consider it,” Park said. “But capital gains tax is only paid when you make a profit, so unless your gains are large enough to begin with, the actual benefit isn’t that meaningful.”

Jung added, “To really take advantage of the tax break, you’d need to invest a fairly large amount. For small retail investors, it’s not particularly attractive.”

Market insiders say the narrow scope of tax incentives, combined with continued demand for safe-haven dollar-denominated assets amid the protracted Middle East conflict, can limit the policy’s effectiveness and undermine the government’s broader push to curb dollar demand and attract foreign-currency inflows.

“Under the current structure, without more meaningful incentives, there may be little reason for investors to shift funds back home,” a brokerage industry official said.