Korean retail investors shift to the US in Q3: Sold over 5.5 trillion won of Korean stocks, purchased more than 10 trillion won of US stocks

Korean retail investors made a decisive shift in funds during the third quarter of this year: they became net sellers of over 5.59 trillion KRW in KOSPI stocks and, during the same period, were net buyers of about 10.15 trillion KRW in US stocks—an abrupt 180-degree reversal from the first half of the year when they "heavily bought domestic stocks and were relatively lukewarm on US stocks."

The catalyst for this change was a sharp correction in the KOSPI after hitting an all-time closing high, which starkly contrasted the continued record highs set by US tech stocks, driven by AI infrastructure expansion.

Analysts pointed out that the appreciation of the KRW further reduced currency exchange costs for retail investors buying US stocks, accelerating the trend of capital outflows in the third quarter.

Korean equities experienced a sharp correction in the third quarter, with the KOSPI index falling about 18.8% in a single quarter, making it the worst-performing major global index. At the beginning of July, core AI memory stocks such as Samsung Electronics and SK hynix were heavily sold off, and the unwinding of leveraged positions further amplified the declines.

14.2 trillion KRW sold in September alone; net sales of 5.59 trillion KRW in Q3

According to data from the Korea Exchange and the SEIBro securities information platform operated by the Korea Securities Depository, Korean retail investors were net sellers of 5.5902 trillion KRW in the KOSPI market during the third quarter.

The turning point in capital flows came in September.

In July and August, retail investors were still net buyers, with net purchases of 5.3735 trillion and 3.2352 trillion KRW, respectively. But in September alone, net selling soared to 14.197 trillion KRW, wiping out the previous two months of net buying in a single month.

Entering October, some buybacks occurred, with about 3 trillion KRW of net repurchases as of the 8th; however, analysts believe this is far from enough to reverse the sell-off pattern that formed in the third quarter.

Net US stock buys of $7.6 billion in Q3; July alone surpasses domestic net buys

At the same time, Korean retail investors were net buyers of $7.63224 billion in US stocks during the third quarter, equivalent to about 10.1468 trillion KRW.

Of this, July accounted for $4.66862 billion (approximately 6.2559 trillion KRW) in net purchases—already exceeding their domestic net buying for the same period. In August and September, there were further net purchases of $1.96234 billion and $1.00128 billion, respectively, maintaining a consistent net buying stance.

According to the Seoul Economic Daily, data as of October shows that Korean investors’ total holdings of US stocks have once again surpassed $200 billion after four months, having previously fallen below that level in June.

The opposite in H1: Retail investors were net buyers of nearly 100 trillion KRW in KOSPI

The magnitude of this shift stands out even more when compared to figures from earlier in the year.

From January to June, retail investors in the KOSPI market made net purchases of 99.1737 trillion KRW—about eight times the amount of US stocks they bought in the same period ($9.8678 billion, equivalent to approximately 13.2228 trillion KRW).

In April and May, amid government measures to boost corporate value in the capital market and attract capital back, retail investors even became net sellers of US stocks, with April seeing net sales of $468.93 million and May registering net sales of $939.77 million.

At that time, the policy guidance briefly took effect. But third-quarter data showed that this effect did not last.

KOSPI plunges from highs; US AI rally stands in sharp contrast

According to the Seoul Economic Daily, analysts attributed the sudden shift in retail investor sentiment to two concurrent factors: a domestic market trapped in a trading range and US mega-cap tech stocks repeatedly hitting all-time highs.

The KOSPI hit a record high closing of 9114.55 on June 22, then pulled back sharply—dropping below 7,000 to 6,806.93 on July 13—and remained weak thereafter.

Meanwhile, the three major US stock indexes continued to climb steadily, buoyed by AI infrastructure expansion, creating a striking contrast.

Exchange rates were also a noteworthy factor.

The KRW/USD exchange rate has recently fallen from over 1,500 in the first half to the mid-1,300s, with the strengthening KRW directly reducing currency-exchange costs for local investors buying US stocks—objectively making capital outflows easier.