South Korea’s retail investors are moving money into US stocks and bonds at an unprecedented pace, pouring record sums into US dollar-denominated assets despite a sharply weaker Korean won and lofty valuations in US markets.
The sheer scale and staying power of these flows are remaking Korea’s currency dynamics and entrenching a feedback loop that is tough to break.
Data obtained by Park Sang-hyuk, the country’s ruling Democratic Party lawmaker, from the Financial Supervisory Service (FSS) showed on Tuesday that individuals exchanged 157.6 trillion won ($107.6 billion) for foreign currencies at nine major brokerages, including Mirae Asset Securities Co., Korea Investment & Securities Co. and Toss Securities Co., through mid-October.
The tally is already an all-time high, surpassing last year’s full-year total and up 61% from 2023.
The amount is not only larger than the country’s largest institutional investor and pension fund National Pension Service’s overseas investment increase through August, but also greater than the onshore foreign exchange market’s average daily turnover of 125.7 trillion won in September.
These flows highlight a fundamental shift in how Korean households save and invest, market analysts said.
As of August, the country’s nine securities firms – Mirae Asset, Korea Investment, NH Investment & Securities Co., KB Securities Co., Samsung Securities Co., Kiwoom Securities Co., Shinhan Securities Co., Toss and Kakaopay Securities Corp. – managed 11.05 million overseas stock accounts in total, nearly triple the number in 2021, according to FSS data.
Growth is steepest among older Koreans, traditionally more loyal to local markets. Overseas accounts held by those aged 60 and above surged 21% from the end of last year, while those in their 50s rose 19%.
Even investors under 20 increased their accounts by 13%.
THE GRAVITATIONAL PULL OF THE US MARKET
According to the Korea Securities Depository (KSD) on Tuesday, Korean retail investors’ offshore holdings have climbed 43% this year to 333.7 trillion won, with 81% concentrated in US equities and bonds.
The most popular pick is Bitmine Immersion Technologies Inc., a crypto-related stock on the New York Stock Exchange, with net purchases of $1.1 billion, followed by Meta Platforms Inc. and the Vanguard S&P 500 ETF (VOO). Stablecoin operator Circle Internet Group ranks fourth.
For many investors, the weakening won itself has become the clearest signal to shift money overseas, even if it means buying US stocks at their priciest levels in years.
A 31-year-old office worker who has been purchasing shares of Nvidia Corp. and Tesla Inc. every month since early last year said that he has recently increased his allocation despite the unfavorable exchange rate and high valuations.
“Watching the won melt away convinced me that I should keep buying dollar-based US stocks for the long term,” he said. “The Korean market is rising, but because it’s denominated in won, isn’t it less attractive for long-term investing?”
That belief is visible in the data obtained from the KSD.
In October alone, Korean retail investors logged $6.81 billion in net purchases of foreign shares, the largest monthly amount on record, even as the country’s benchmark Kospi index broke through the 4,000 level for the first time, with more than a 70% gain this year alone.
Over the same period, households dumped more than 15 trillion won in domestic shares.
The divergence illustrates a growing perception that Korean assets are structurally vulnerable.
Even during a recent period of global dollar softness, the Korean currency weakened further. From mid-September to mid-November, the dollar index rose 3.1%, while the won sank 6.1%, a steeper slide than the yen, yuan or euro, according to Hyundai Research Institute.
“(Korean retail) investors continue to favor US stocks and gold as hedges against their won exposure,” said Choi Kwang-hyuk, research head at LS Securities Co. “With the AI boom, many also believe US names such as Nvidia are more solid.”
Bank of America recently echoed the view, saying Korean households are now the biggest driver of foreign-currency demand. The bank added the won’s slide is no ordinary cycle but a “structural capital-outflow phenomenon.”
LEVERAGE, INEQUALITY AND THE NEW ‘INVESTING EMIGRATION’
Growing retail participation abroad is also driven by access to instruments unavailable at home.
Triple-leveraged ETFs, crypto-linked names, inverse products and high-volatility trades, which are largely banned in Korea, are easily accessible in the US.
The Direxion Daily TSLA Bull 2X Shares (TSLL), which seeks 200% daily leveraged investment results, is 47% owned by Korean investors.
Hong Kong-based research firm CLSA sees deeper economic pressures at work, saying soaring real-estate prices and growing inequality are pushing ordinary Koreans into riskier financial bets to chase higher returns.
What began as a tactical investment has now evolved, as brokerage analysts describe it, into a form of “investing emigration.”
But that shift feeds back into the currency. As more households seek safety in dollar assets, their collective demand pushes the won lower, reinforcing the view that staying in won assets is risky.
“We can’t expect the won to strengthen unless the pace of individual outflows into dollar assets slows,” said Korea Investment & Securities researcher Moon Da-un.
A POLICY DILEMMA: MAKING THE HOME MARKET ATTRACTIVE AGAIN
The government faces the difficult task of reversing capital flight by making domestic markets more appealing, rather than restricting access to foreign ones.
Despite the Kospi’s historic rally, officials acknowledge that retail confidence remains deeply damaged.
Rep. Park Sang-hyuk said the latest rally in Korean stocks has yet to persuade investors to rethink their stance.
“Even with the Kospi breaking above 4,000, it’s still not enough to ease individuals’ long-held distrust toward the Korean market,” he said. “We need incentives like tax benefits for long-term investors to make domestic equities more attractive.”
Policymakers are now debating reforms to enhance liquidity, strengthen corporate governance and raise expected returns in Korea’s stock market.
Without such measures, analysts warn that structural outflows could become permanent, and the won’s weakness a lasting feature of the economy.
