South Korean retail investors are increasingly turning to U.S. stocks, with holdings in U.S. equities surpassing $100 billion for the first time. A recent survey shows that most investors prefer the U.S. stock market over the domestic market.
According to the survey conducted on Feb. 17-18 by the Korea Chamber of Commerce and Industry (KCCI), 54.5% of 1,505 respondents said they preferred investing in the U.S. stock market, while only 23.4% said they favored the Korean market. The remaining 22.4% responded that they saw no significant difference between the two markets.
Investors cited innovation and higher profitability for investing in U.S. stocks (27.2%). Other key factors included active shareholder returns (21.3%), the downturn in the Korean stock market (17.5%), a robust U.S. economy (15.4%), transparent corporate governance (14.8%), and investor-friendly tax policies and government support (3.8%).
The rise of so-called “seo-hak ants”—Korean retail investors buying foreign stocks—is expected to continue. An overwhelming 79.0% of respondents said they plan to increase investment in the U.S. market, while 15.3% intend to maintain their current holdings. Only 5.7% planned to cut back on their investments. For the Korean market, 54.3% said they would increase their investments, while 26.6% plan to maintain their current level, and 19.1% intend to scale back.
Around 34.6% of respondents said a lack of corporate innovation was the primary reason behind the sluggish performance of Korean equities. Other concerns included heavy regulations on businesses and financial markets (23.6%), the widespread practice of short-term investments (17.5%), weak corporate governance and shareholder returns (15.4%), and insufficient support for financial investments (6.8%).
To boost the Korean market, 26% of respondents pointed to tax incentives. The most frequently suggested measure was introducing tax benefits for long-term stock holdings, similar to the U.S., where capital gains taxes are reduced for stocks held longer than a year. Lowering dividend income tax (21.8%) was also mentioned as a necessary reform.
“Efforts to boost market valuations should focus on fostering the growth of innovative companies and providing incentives for those investing in those stocks,” said Kang Seok-gu, head of research at KCCI. “Lawmakers should make targeted amendments to the Capital Market Act to address specific issues rather than implementing broad, sweeping changes.”
