Retail investors pile back into US equities

South Korean retail investors are returning to US equities, ramping up purchases of semiconductor stocks and benchmark exchange-traded funds as the won strengthens and the Kospi rally loses steam.

Net purchases of US stocks by local investors reached $1.95 billion between July 1 and 16 on a settlement basis, the highest monthly total in five months, according to the Korea Securities Depository.

The rebound follows an earlier slowdown, when retail investors turned net sellers in April and May before returning to net buying in June. Purchases so far in July have already more than tripled June’s total.

Earlier in the year, a surging Kospi and a weaker won prompted retail investors to rotate into domestic equities. More recently, however, the Kospi has pulled back while the won has strengthened to around 1,470 per dollar, making US assets relatively more attractive.

The Direxion Daily Semiconductors Bull 3X Shares ETF, which delivers three times the daily performance of the Philadelphia Semiconductor Index, was the most heavily bought security this month, attracting $1.85 billion in net purchases between July 1 and Monday.

SK hynix’s American depositary receipts ranked second with $547.5 million in net purchases. Since the ADRs began trading on July 10, net buying over the first five settlement days has more than tripled from the amount recorded on their debut.

The Direxion Daily MSCI South Korea Bull 3X Shares ETF, which tracks three times the daily performance of South Korean equities, ranked third with $221.3 million in net purchases.

By Choi Yeon-jae (ch0221@heraldcorp.com)