"Over 1 Trillion Won Poured Into 3x Semiconductor ETF"... But the No. 2 and No. 3 Picks Are Unexpected

Adding safe-haven assets amid aggressive bets on tech stocks
Value of U.S. stock holdings shows a clear rebound
"U.S. market continues to lead in stability and growth"

Recent data show that Korean retail investors buying U.S. stocks have been snapping up U.S. Treasuries and dividend stocks alongside 3x leveraged semiconductor products. They appear to be pursuing a two-track strategy: investing aggressively on expectations of an improving outlook for AI semiconductors while increasing the share of safe-haven assets through U.S. Treasury bills with maturities of less than three months and dividend exchange-traded funds (ETFs).

According to SEIBro, the Korea Securities Depository’s securities information portal, the most heavily net-purchased U.S.-listed security by Korean investors from October 1 to 13 was the Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL), with net purchases totaling $884.09 million.

In second place was the iShares 0-3 Month Treasury Bond ETF (SGOV), with net purchases of $103.44 million. Third was the Schwab U.S. Dividend Equity ETF (SCHD), a leading U.S. dividend ETF, with net purchases of $73.76 million.

The SPDR Portfolio S&P 500 ETF (SPLG), which tracks the S&P 500 Index, ranked fourth with $67.18 million. AMD, a major AI semiconductor company, placed fifth with $54.58 million. Alphabet ranked sixth with $51.82 million, while the Invesco NASDAQ 100 ETF (QQQM), which tracks the Nasdaq-100 Index, placed seventh with $51.53 million. The Direxion Daily MSCI South Korea Bull 3X Shares ETF (KORU) ranked eighth with $45.30 million; quantum computing company IonQ came ninth with $44.78 million; and Taiwan’s TSMC, the world’s largest foundry (contract semiconductor manufacturer), ranked tenth with $43.60 million.

The value of U.S. stocks held by Korean investors has been rebounding this year. It stood at around $168 billion at the start of the year, peaked at $204.1 billion in May, and is now at $195.2 billion in October, nearing a return above $200 billion. The relative appeal of U.S. Treasuries and dollar-denominated assets has increased further amid fiscal uncertainty in Europe, while U.S. megacap tech companies continue to deliver exceptional earnings momentum. As a result, inflows from Korean retail investors buying U.S. stocks are expected to continue.

Samsung Securities said that demand from retail investors for U.S. Treasuries was confirmed at the October 7 auction of 10-year U.S. Treasury notes: the bid-to-cover ratio reached 2.77, its highest level since 2016, while primary dealers took down the lowest volume on record. The brokerage also noted that few markets can offer both stability and growth potential to the same degree as the U.S. financial market, and that most companies with exposure to the AI industry are based in the United States. These factors, it said, should not be overlooked and could lead to an even greater concentration of investment flows.

“S&P 500 net income in the third quarter is expected to grow by more than 30% year over year, and there is virtually nowhere else among developed markets where growth on this scale can be expected,” said Seo Jeong-hoon, a researcher at Samsung Securities. “The Nasdaq-100’s 12-month forward price-to-earnings (P/E) ratio is about 22% below its peak, thanks to steady earnings improvement, and long-term performance has been positive when the index has entered this range.”

This content was produced with the assistance of AI translation services.