Korean buy in U.S. ETFs surges $3.2 bn on yr as stock frenzy moves to offshore

2021.11.17 16:04:30

[Graphics by Song Ji-yoon]이미지 확대

[Graphics by Song Ji-yoon]

South Koreans’ investment in U.S exchange traded-funds increased $3.2 billion this year as Korean individuals turned to the hotter U.S. market amid stagnation at domestic bourse.

The Korea Securities Depository’s data showed Wednesday that Koreans have put money in 12 most-popular U.S ETFs worth $5.7 billion as of Nov. 12, more than doubled from $2.5 billion recorded on Dec. 31, 2020.

Korean retail investor invested record $66.7 billion in overseas securities including ETFs as of September this year.

Korean mom-and-pop investors turned their eyes to overseas ETFs after the market conditions soured at home in the second half. Kospi added mere 1.8 percent this year while Nasdaq jumped 26 percent.

ETFs have been especially popular for novice Koreans seeking investment opportunities abroad.

Koreans’ investment in overseas ETFs reached 7.5 trillion won ($6.3 billion) as of Nov. 12, according to data of three brokerage firms NH, Mirae Asset and Samsung. Individual overseas ETF investment had amounted 2 trillion won at the end of 2019 and 36 trillion won at the end of 2020.

Koreans’ favorite foreign ETF was Invesco QQQ Trust Series 1 with holdings amounting to $1.2 billion as of Nov. 12. The fund tracking Nasdaq- 100 Index added 11 percent this month alone.

Second favorite was SPDR S&P 500 ETF Trust, which tracks Standard & Poor`s 500 Index. Korean investors have placed $958.4 million.

Koreans have invested the third largest $878.5 billion in ProShares UltraPro QQQ. The ETF seeks a daily return that corresponds to three times the return of underlying Nasdaq-100 Index.

Koreans are lured by wider choices and tax advantage on gains in overseas ETFs, observed Bae Jae-gyu from Samsung Asset Management.

By Kim Jung-beom, Shin Hwa and Cho Jeehyun

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