The number of South Korean investors directly buying overseas stocks is rapidly increasing. Korean investors have been purchasing nearly 2 trillion won (US$1.70 billion) worth of foreign stocks every month from the beginning of this year.
The total amount of direct and indirect investment in overseas stocks by domestic investors stood at US$6.44 billion (7.59 trillion won) from January to April this year, according to the data from the Korea Securities Depository (KSD). The figure reaches US$1.61 billion (1.90 trillion won) a month on average, hitting a record high.
The investors are buying mainly U.S. stocks. The United States accounted for 67.4 percent of the total overseas stock trading last month, followed by Hong Kong with 16.1 percent, China with 7.9 percent, Japan with 6.1 percent and Europe with 0.1 percent. The amount of U.S. stock transactions came to US$2.07 billion (2.44 trillion won) last month, up 29.9 percent from US$1.59 billion (1.87 trillion won) a year earlier. The amount of transactions include both purchases and sales. However, the purchase amount shows a steeper rise of 38.8 percent to US$1.12 billion (1.32 trillion) from US$860 million (1.01 trillion won) in April 2018.
By company, four companies called “MAGA” – Microsoft, Amazon, Google and Apple – attract most attention from South Korean investors. In addition, NVIDIA, Tesla and Netflix ranked seventh to ninth in terms of investors’ interest, while Walt Disney, AMD and Alibaba took 11th to 13th place. For Disney which owns Marvel Studios, investors have become more interested in the firm after it released “Avengers: Endgame” in late April and the film became a big hit. When it comes to the amount of stock transactions, Disney moved up three notches from ninth to sixth, excluding ETF, as of April 24 when the Avengers was released.
Experts say that an increasing number of South Korean investors is seeking for alternatives overseas as they do not feel drawn toward the local stock market. A CEO at an investment consultancy said, “Many say that only a handful of companies are expected to grow in the future in South Korea. Since there are more companies with high growth potential in the global market than the local market, more and more investors are highly likely to invest in overseas stocks in the future.”