Will Korean Individual Investors Investing in Overseas Stocks Return to the Domestic Market? RIA Balances Top 100 Billion Won

Domestic individual investors turned into net sellers across major overseas stock markets, including the U.S., Japan, China and Hong Kong, this month. As even U.S. stocks shifted to net selling, signs emerged that overseas investment funds are being reallocated, while attention is also growing on the effects of the Reshoring Investment Account (RIA).
According to Save-ro, the securities information portal of the Korea Securities Depository (KSD), domestic individual investors net sold $1.28555 billion worth of U.S. stocks, or about 1.8994 trillion won, between the 1st and 24th of this month. Since U.S. stocks have long been considered the main destination for domestic individual investors, the shift to net selling is drawing market attention. Investors also net sold $9.48 million worth of Japanese stocks, $9.48 million worth of Hong Kong stocks and $18.26 million worth of Chinese stocks, or about 27 billion won. That means selling pressure appeared simultaneously across major overseas markets, including the U.S.
Market watchers say this is less about fading enthusiasm for overseas stocks and more about profit-taking. U.S. equities have posted strong gains on the back of large technology stocks tied to Artificial Intelligence (AI), while the Japan stock market has also maintained an upward trend on the weak yen and expectations for improved corporate governance. Chinese and Hong Kong markets also saw rebounds on hopes for economic stimulus, prompting some investors to lock in gains.
The rising relative attractiveness of the domestic market is also cited as a reason for the capital shift. Expectations for an improved semiconductor cycle, a return to net foreign buying and anticipated inflows from inclusion in the World Government Bond Index (WGBI) are boosting demand for won-denominated assets. As the KOSPI Composite Index rebounds on policy hopes and better liquidity conditions, some profit-taking funds from overseas stocks could move into the domestic market, observers said.
The RIA, launched to encourage funds to return home, is also growing rapidly just one month after its debut. Under the scheme, investors who sell overseas stocks and invest the proceeds in domestic stocks for at least one year can receive capital gains tax benefits. According to the Korea Financial Investment Association (KOFIA), cumulative RIA accounts stood at 168,347 as of the 23rd, while balances reached 1.1051 trillion won, surpassing 1 trillion won within a month of launch. Compared with the 17,965 accounts opened on the first day, the number of accounts has increased more than ninefold.
koreanbae@fnnews.com Bae Hangeul Reporter