Korean Investors Favor Overseas ETFs Despite Domestic Market Gains

Domestic investors who have shifted capital to overseas stock markets are maintaining their positions in international markets, particularly in the United States and Hong Kong, opting for Korea-related exchange-traded funds (ETFs) listed locally rather than returning to the Korean stock market. Recent data indicates a net purchase of approximately 360 billion won (approximately $277.8 million USD as of March 7, 2026) in major stocks over the past month.

Overseas ETF Purchases

According to the Korea Securities Depository’s Securities Information Portal, Korea-related ETFs were among the top stocks net purchased by individual investors in the U.S. Stock market between February 6 and March 5.

• Direxion Daily MSCI South Korea Bull 3X Shares: Ranked 4th in net purchases, with $168,289,563 (approximately 248.16 billion won) acquired. This is a leveraged ETF that aims to deliver three times the daily performance of the Korean stock market.
• iShares MSCI South Korea ETF: Recorded an inflow of $76,623,740 (approximately 112.99 billion won), securing the 10th position in net purchases by domestic investors in the U.S. Market. This ETF tracks the Korean stock market at a 1x ratio.
• XL2CSOPSMSN (Hong Kong Stock Market): Net purchases totaled $3,008,565 (approximately 4.44 billion won), ranking fourth among domestic investor purchases in Hong Kong. This ETF tracks the stock price of Samsung Electronics with a 2x leverage.

The listing of leveraged ETFs for Samsung Electronics and SK Hynix on the Hong Kong stock market has spurred consistent buying pressure, with a total of $116.46 million (approximately 172.58 billion won) in funds from domestic investors allocated to these stocks.

Reasons for Staying Overseas

Several factors contribute to the continued investment in overseas markets by Korean investors, often referred to as “Seohak ants.”

• Foreign Exchange Gains: The weakening of the Korean won against the U.S. Dollar, recently reaching the 1,500 won range due to global events like the Iran incident, provides an incentive to hold U.S. Stocks. Asset value in Korean won increases even without stock price appreciation.
• Leveraged ETFs: The availability of leveraged ETFs, not offered in Korea, attracts investors seeking potentially higher returns.
• Tax Incentive Delays: Delays in implementing tax incentive systems designed to attract overseas investment funds back to Korea have diminished the incentive for repatriation.

Investors are strategically utilizing Korea-related ETFs listed on overseas exchanges to benefit from the performance of the domestic stock market.

Korean Market Performance and Outlook

Despite recent declines following the Iran incident, the KOSPI and KOSDAQ have demonstrated strong year-to-date gains, with cumulative increases of 32.53% and 24.77%, respectively, exceeding the performance of major global stock markets.

Securities analysts anticipate a potential recovery in the domestic stock market. Na Jeong-hwan, a researcher at NH Investment & Securities, suggests a rebound is likely, particularly in sectors and stocks that have experienced excessive losses, as the market moves past immediate concerns regarding geopolitical events. Jeong Hae-chang, a researcher at Daishin Securities, predicts a resumption of the upward trend if the period of instability extends beyond March, as policy and fundamental performance drivers are reaffirmed.