First Net Sell-Off in Four Months! Korean Investors Dumped $281 Million in U.S. Stocks Last Week

Latest data released Tuesday (Dec 30) shows that last week, Korean investors turned net sellers of U.S. stocks — the first time in four months. Meanwhile, the Korean government is taking steps to encourage capital repatriation to the domestic market.

According to Korea Securities Depository (KSD) data, from December 22–26, local investors net sold $281.4 million in U.S. stocks — marking the first net sell-off since the third week of August (when net sales reached $207.9 million).

Korean Government Moves to Stem Capital Outflows

Notably, the Korean government is working to curb ongoing net capital outflows by local investors — a factor partly contributing to the won hitting near 16-year lows against the dollar.

Local financial regulators have asked securities firms to reduce promotion of overseas investments. On Wednesday last week (Dec 24), the government even introduced temporary tax incentives to encourage individuals to sell overseas stocks and reinvest proceeds in the domestic market.

However, market observers say it remains uncertain whether Korean retail investors will return to the local market, given other factors like currency volatility and year-end profit-taking.

Hyundai Motor Securities analyst Kim Jae-eung said: “If there truly is a ‘capital flow reversal,’ we should have seen much stronger retail buying pressure in the benchmark KOSPI last week.”

Instead, retail investors net sold ₩7 trillion (~$4.9 billion) in domestic stocks last week.

Additionally, per Korea Exchange data, as of Friday last week (Oct 26), Korean investors’ deposits (cash awaiting investment) hit a monthly high of ₩85.4 trillion.