数据显示，South Korean retail investors have bought about $9 billion worth of US stocks so far this year, while selling about $11.9 billion worth of Korean stocks during the same period, setting a new record. In order to stimulate the economy and boost the stock market, the South Korean government has announced a series of proposed tax relief measures this year, but retail investors in South Korea are not buying it.
Despite the major stock market fluctuations last week, South Korean retail investors chose to ignore them and continue to buy American stocks.
According to media reports on August 14th, despite the South Korean government's repeated measures to boost the domestic stock market, individual investors in South Korea have been investing in American stocks since earlier this year due to the AI boom. The most popular stock among South Korean individual investors is Tesla, followed by Nvidia and Apple in terms of holdings.
Data shows that from January to July this year, South Korean retail investors bought about $9 billion worth of American stocks and sold a record 16.3 trillion Korean won (approximately $11.9 billion) worth of Korean stocks during the same period. This led to the Seoul Composite Index falling 1.3% year-to-date, while the S&P 500 index and Nikkei 225 index rose 13% and 5%, respectively.
This has caused the Seoul Composite Index to fall 1.3% year-to-date, while the S&P 500 index and Nikkei 225 index have risen by 13% and 5%, respectively.
These South Korean retail investors are disappointed with domestic companies like Samsung and SK Hynix, believing they are not at the forefront of the AI boom. So far this year, Samsung's stock price has fallen 4%, while Nvidia's has skyrocketed 120%. SK Hynix has performed slightly better, rising 25% this year.
According to the Financial Services Commission of South Korea, the average ratio of dividends to net income for listed South Korean companies over the past 10 years is 26%, lower than Japan's 36% and the US's 42%. In addition, over the past 10 years, the average price-to-book ratio for South Korean companies is 1.04, compared to 3.64 for US companies.
In fact, the South Korean government has announced a series of tax reductions this year to stimulate the economy and boost the stock market. However, South Korean retail investors have not responded positively.
Former South Korean President Moon Jae-in previously pointed out that tax rates are one of the reasons why the South Korean market lags behind foreign competitors. Subsequently, in order to boost the stock market and attract more foreign capital, the government launched the 'Corporate Value Enhancement' program and promised to strengthen these efforts through tax incentives. The new measures include rewarding companies that increase shareholder returns, encouraging them to use more cash for share buybacks and dividends.
In June of this year, the South Korean government announced plans to extend the ban on short selling in the stock market until March of next year and increase penalties for illegal activities such as naked short selling, which may result in life imprisonment.
In addition, the South Korean government plans to extend tax breaks for key technology industries such as semiconductors for three years and postpone the plan to impose a holding tax on cryptocurrencies for another two years.
