Retail investors bristle as gov't shifts blame for won's slide onto overseas stock traders

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Lee, a 39-year-old office worker at a consulting firm who invests in Tesla and other U.S. stocks, said his frustration has grown after being notified by his brokerage that its incentive scheme for overseas stock trading would end earlier than initially thought.

The move comes as financial authorities have urged brokerages to curb marketing related to overseas investment as part of efforts to prop up the local currency amid a sharp rise in the won-dollar exchange rate.

“Promotional benefits and information channels for overseas investing are disappearing. It feels as though the responsibility for currency instability is being shifted onto individual investors,” Lee said. “Domestic stocks have clearly lost their appeal, yet under the banner of exchange rate stabilization, the government is intervening even in individuals’ overseas investments.”

Online stock forums are also being flooded with complaints such as, “Exchange rates are a macroeconomic issue. Why are retail overseas investors being targeted?”

The backlash among retail investors has intensified as the government rolls out measures designed to draw capital flowing into dollar-denominated assets back into the local currency market, even as the won remains weak. Many investors contend that these steps unfairly target rising retail investment in overseas stocks, portraying it as a key driver of the currency’s decline.

On Dec. 19, the Financial Supervisory Service, the country’s financial watchdog, instructed securities firms to halt new cash incentives and scale back aggressive marketing tied to overseas investment until March next year.

In response, Meritz Securities decided to end its commission-free trading scheme for U.S. equities offered through non-face-to-face accounts starting early next year. The firm had originally planned to maintain zero commissions on both local and U.S. stock trades through the end of next year, but this will now apply only to existing clients, with new customers excluded from fee-free U.S. stock trading. The company has not ruled out a complete phase-out in the future.

Other brokerages are taking similar steps. Samsung Securities and Kiwoom Securities have stopped offering investment bonuses to new overseas stock investors, while Korea Investment & Securities and Eugene Investment & Securities have discontinued cash incentives for transferring overseas stock holdings from rival firms.

Cuts to information services are further heightening investor frustration. Kiwoom Securities plans to temporarily shut down its Telegram channel that has delivered U.S. stock information from the end of this month. The channel has served as a key real-time information hub for retail investors, providing updates on U.S. market schedules and major stock-related developments.

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Controversy has further escalated following the government’s announcement of tax incentives aimed at steering investors back to the domestic stock market by encouraging the sale of overseas equities.

According to the Ministry of Economy and Finance, the scheme centers on a temporary capital gains tax break for overseas stock sales, provided investors sell foreign shares held as of Dec. 23, convert the proceeds into won and reinvest them for a set period through a reshoring investment account.

The incentives are structured to favor early participation, offering a full tax exemption for investors who return in the first quarter of next year, followed by 80 percent in the second quarter and 50 percent in the latter half of the year.

While the stated goal is to channel dollar-denominated assets back into the won market to help stabilize the foreign exchange market, many retail investors see the move as an implicit push to offload their overseas stock portfolios.

Lim, a U.S. stock investor in his 40s who works as a private academy instructor, said temporary tax breaks would not be enough to persuade him to shift his funds back to the local market.

“U.S. equities are largely long-term holdings. With the outlook for major U.S. companies still solid, it’s not easy to walk away from them,” he said.

Financial authorities maintain that enhanced investor protections and tighter risk management are needed amid the rapid growth in overseas investment. Industry insiders, however, argue that risk warnings should be kept separate from restrictions on information and marketing.

“Raising awareness of overseas investment risks is understandable, but scaling back information services and routine marketing could ultimately undermine investors’ ability to make well-informed decisions,” a securities industry official said.