Seohak Ants Pause Net Selling, Turn Back to US Stocks Amid Market Rebound

The 'Seohak Ants,' the colloquial term for South Korean retail investors heavily invested in US stocks, are exhibiting a notable shift in their investment behavior. After a significant period of net selling in March, the first in ten months, these investors appear to be making a 'U-turn' back towards the American market, spurred by a recent rebound in US stock prices.

Data from the Korea Securities Depository reveals that domestic investors sold a net $468.92 million (approximately 692.5 billion won) worth of US stocks last month. This marked the first time since June of last year that they engaged in net selling, with the scale of the sell-off being the largest since May 2023. At that time, investors were primarily cashing in on profits as the market recovered from a slump caused by former US President Donald Trump's tariff shock.

The recent net selling was concentrated in the early part of March, coinciding with heightened uncertainties surrounding the US-Iran conflict. However, as the US and Iran declared a two-week ceasefire and entered negotiations, the stock market began to rally. This recovery prompted the Seohak Ants to shift their stance, moving from net sellers to net buyers within the month. By the latter half of March, they had purchased a substantial $927.24 million worth of US stocks.

While the S&P 500 and Nasdaq saw significant gains in March (10.4% and 15.3% respectively), their performance, though strong, did not match the remarkable surge of the KOSPI (30.6%). Despite this, the trend of South Korean investors returning to US equities is expected to persist. Factors such as the 100% capital gains tax exemption on overseas stock sales made by the end of this year are likely to encourage further investment and potentially increase the size of 'Return to Korea' (RIA) accounts, which currently hold about 0.5% of the total value of US stocks held by Seohak Ants.