Personal investment in US stocks turns to net selling after 10 months

South Korean retail investors have reversed their trend of actively investing in overseas stocks, moving to net selling for the first time in ten months in April. This significant shift, detailed by the International Financial Center and Korea Securities Depository, signals a change in sentiment among individual investors. After a record net purchase of $6.81 billion in October last year, the flow of funds abroad began to decrease, culminating in a net sale of $520 million in April. The primary driver appears to be profit-taking, particularly in leveraged Exchange Traded Funds (ETFs) related to US stocks, as investors cashed in on the recent market upswing. This occurred despite the cumulative net purchase of US stocks reaching $10.17 billion for the year up to April. The data reveals a nuanced picture across different markets: while US, Hong Kong, and Chinese stocks experienced net selling, the Eurozone and Japan saw net buying. Notably, Japan's market shifted to net buying for the first time since March of the previous year. The dominance of US stocks in South Korean investors' portfolios remains unchallenged, accounting for 95% of their total overseas holdings ($179.76 billion out of $189.31 billion as of April). This move towards net selling, especially in leveraged products, suggests a more cautious approach, possibly anticipating market volatility or simply locking in gains after a period of strong performance. It's a dynamic shift reflecting the evolving strategies of Korean retail investors in the global financial arena.

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Recently, the US stock market has continued its upward trend, but analyzing the top 50 stocks by net purchases on the Korea Securities Depository, domestic individual investors shifted to net selling in April, focusing on leveraged ETFs during the US stock price rebound phase to realize profits.