“Why is only the Korean market falling?” ... ETF and direct-investment money heads to the U.S. as the KOSPI is left behind

[Financial News] As U.S. stocks set new record highs, the KOSPI has been retreating, making the flow of investment money to the U.S. increasingly conspicuous. Over the past month, three ETFs tracking major U.S. indexes attracted ₩1.6307 trillion, ranking among the top 10 ETFs for inflows, while domestic equity ETFs drew just ₩560.8 billion across two covered-call funds.
According to the Korea Exchange on the 12th, the KOSPI fell 6.64% from the 1st to the 12th of this month. By contrast, the S&P 500 and Nasdaq indexes rose 2.09% and 1.88%, respectively, as of the 9th, the previous trading day.
The weakness of domestic equity products was especially evident in ETF fund flows. Over the most recent month, from September 8 to October 8, three ETFs tracking the U.S. Nasdaq 100 and S&P 500 attracted ₩1.6307 trillion, ranking among the 10 ETFs with the largest inflows. By contrast, the only domestic equity ETFs to make the list were two covered-call funds, which drew just ₩560.8 billion.
Net purchases of U.S. stocks by direct investors have also risen rapidly this month. According to the Korea Securities Depository, domestic investors’ net purchases of U.S. stocks totaled $1.37327 billion over seven trading days from October 1 to 9, already surpassing the $1.00128 billion net total for all of September. Average daily net purchases by trading day also more than quadrupled, from about $47.68 million in September to about $196.18 million in October.
Securities analysts say the U.S. market’s relative appeal is coming to the fore, citing U.S. growth, corporate earnings outlooks and valuations. U.S. nominal growth in the second quarter was 6.3%, exceeding the 10-year Treasury yield, which was in the low 5% range. S&P 500 companies’ earnings per share (EPS) growth in the third and fourth quarters is expected to exceed 30%. The Nasdaq 100, which recently hit a new high, is also seen as carrying limited valuation risk, with its 12-month forward price-to-earnings ratio (P/E) about 22% below its peak.
Seo Jeong-hun, head of the Global Equity Team at Samsung Securities Co., Ltd., said, “The U.S. economy’s growth momentum is being driven by the AI investment boom led by Big Tech,” adding, “We should continue to bear in mind that most of the companies ultimately benefiting from this are also based in the U.S. itself.”
[email protected] Bae Han-geul Reporter