Korean investors are increasingly turning to U.S. equities as volatility in the domestic stock and currency markets intensifies, fueled by stalled trade talks between Korea and the United States.
According to data from the Korea Securities Depository, Korean investors poured $1.34 billion into U.S. stocks from Sept. 19-25.
This represents a nearly 14-fold surge from just $96 million the previous week, highlighting a sharp pivot in investment behavior.
In constrast, data from the Korea Financial Investment Association showed that investor deposits increased steadily in that same date range to reach 75.99 trillion won ($53.89 billion).
Investor deposits refer to the total balance that investors hold in their brokerage accounts, meaning they are idle funds waiting to be invested in the stock market.
They typically increase in proportion to expectations for future stock market gains.
Analysts say the sudden capital shift reflects growing concerns over the Korean stock market’s stability, as expectations of a continued rally were undermined by rising uncertainties.
The benchmark KOSPI, which had been pushing toward the 3,500 mark earlier this month, reversed course Wednesday. After falling 14.05 percent on Wednesday, it dropped a further 1.03 percent on Thursday and 2.45 percent on Friday to close at 3,386.05 points.
Driving the downturn is a mix of global and local pressures.
Stronger-than-expected U.S. economic data has dimmed hopes for rapid interest rate cuts, while the weakening of the dollar — seen as a supportive factor for Korean stocks — has also lost momentum.
Compounding the instability are recent setbacks in trade negotiations with the U.S., particularly over pharmaceutical tariffs and outbound investment issues.
With the Chuseok holiday approaching, investor caution appears to be rising further.
“Concerns about a breakdown in Korea-U.S. trade negotiations seem to be already reflected in the market,” said Na Jung-hwan, a researcher at NH Investment & Securities. “If talks fail and the U.S. pushes ahead with higher tariffs, prolonged market weakness is likely.”
U.S. stocks and exchange-traded funds (ETF) have become popular destinations for Korean capital, especially in sectors tied to cryptocurrency and artificial intelligence (AI).
The most heavily bought asset last week was Bitmine, a firm associated with strategic Ethereum accumulation, followed by a leveraged Ethereum ETF and AI chip giant Nvidia.
In Korea’s ETF market, inflows also shifted toward safer assets. While the KODEX 200, which tracks the KOSPI 200, led with 377.4 billion won in inflows, most other top-performing ETFs were bond-related or focused on U.S. equities.
Despite the capital outflow, investor cash reserves remain high. Investor deposits rose to 75.99 trillion won last week, just shy of the all-time high of 77.9 trillion won recorded in May 2021. Margin trading balances also increased, suggesting that many investors still see opportunities in the current market correction.