South Korea’s retail investors are flocking to US equities, betting a stock market rally will continue in the second Donald Trump presidency and frustrated by years of poor share performance at home. Holdings of US stocks by the country’s investors reached a record $112.1bn at the end of 2024, according to Korea Securities Depository data, up 65 per cent from a year earlier. That contrasts sharply with their net selling of Won5.4tn ($3.
6bn) worth of local shares listed on the Kospi benchmark last year, dragging the index down nearly 10 per cent. This came despite the government’s efforts to boost historically low valuations through a “Corporate Value-up” initiative. Tesla was the most popular overseas stock held by South Korean investors, prompting Elon Musk to call Koreans “smart people” in a post on X in July. South Korean individuals held a combined $24.5bn worth of Tesla shares as of last month, followed by $12.1bn in Nvidia, $4.9bn in Apple and $3.2bn in Microsoft. “The shift highlights their frustration with the local equity market due to the poor shareholder return,” said Namuh Rhee, head of the Korea Corporate Governance Forum. “The trend is likely to continue unless something dramatic happens.” Retail investors’ shift to US stocks could even intensify this year due to the uncertainty around recent political upheavals at home. Lawmakers impeached President Yoon Suk Yeol last month after he briefly declared martial law. South Korea’s annualised 10-year total shareholder return stands at just 5 per cent, compared with 10 per cent in Japan and 13 per cent in the US, according to MSCI data. HJ Baek, a 39-year-old communications manager at a local brokerage, has been investing in US stocks since 2019 and now holds about Won100mn of US shares, including Tesla, Apple and those in Warren Buffett’s portfolio. “I prefer to invest in the long term but the domestic stock market is too volatile,” she sai