Invest1 publisher2 min readPublished
Korean investors favour Treasury-bill and dividend ETFs over a 3x chip fund nearly three to one
Korean investors put $477 million into two defensive US ETFs in September, nearly three times the $168 million sent to a triple-leveraged chip fund. Their $589 million of net buying covers about 7.5% of the $7.8 billion rise in US holdings since August, so price gains account for the rest.
The Investor · Invest desk
What happened
- Korean investors held $196.249 billion of US stocks on September 24, about 4% below May's record of $204.161 billion, according to the Korea Securities Depository.
- Net purchases of US stocks came to about $589.14 million this month, a period in which the KOSPI climbed back above 7,000.
- The iShares 0-3 Month Treasury Bond ETF (SGOV) was the most bought US security at $274.79 million, with the Schwab US Dividend Equity ETF (SCHD) second at $202.54 million.
- The Direxion Daily Semiconductor Bull 3X ETF (SOXL), built to return three times a chip index's daily move, ranked fourth at $167.52 million, just behind Alphabet at $173.46 million.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- exposure Price gains supplied about 92% of September's $7.8 billion rise, so any return to the $204 billion record will come mainly from US prices, with Korean buying a small contributor.
- contradiction The four most-bought names exceed the month's net total by $229 million, so if both figures cover the same securities, other US holdings were net sold to pay for the barbell.
- decision Brokerage deposits back above 100 trillion won give Korean retail money to put into the KOSPI after Chuseok, and the US funds now compete with a domestic rally for those savings.
Since August, when Korean holdings of US stocks stood at $188.4 billion [3], the total has gained about $7.85 billion [1]. September's net buying covers roughly 7.5% of that gain [2]. The other $7.26 billion or so is price, earned on shares Koreans already owned, and it kept accruing while Seoul was closed for Chuseok: on the 25th the Nasdaq Composite rose 0.48% and the Philadelphia Semiconductor Index 1.41% [12]. Against a book of nearly $200 billion, the month's new money is about 0.3% [11].
The four most-bought securities add up to $818.31 million [3]. That is $229.17 million more than the month's entire net purchase figure [3]. If the two tallies cover the same securities (the Sedaily report does not say), Korean investors sold at least that much of other US holdings while they bought both ends of the trade. SGOV alone equals about 47% of the month's net buying [5].
Sedaily calls the pattern a barbell, with short-term Treasury debt as a hedge at one end and leveraged bets on AI and chips at the other [9]. The weights are uneven. SGOV and SCHD together drew $477.33 million, about 2.85 times SOXL's inflow [4]. Even with Alphabet counted on the risk side, the AI-and-chip end comes to $340.98 million [9]. The SGOV money sits in US government debt maturing within three months [5]; it is in neither US equities nor the KOSPI.
A second channel runs through the Korean exchange. KODEX US Nasdaq 100, TIGER US S&P 500 and KODEX US S&P 500 took 473.9 billion won between them in the week to the 22nd [8], three of the top five inflow spots in Koscom's data [10].
The SGOV balance can be read as dollar cash waiting for a dip, able to move into SOXL or a Nasdaq fund in a single order, in which case the defensive tilt overstates the caution. Or the cash goes home. Brokerage deposits have added about 7.43 trillion won since the 4th, yet remain about 27.7% below June's peak of 139.6947 trillion won [6] [14]. Or nothing moves, and the holdings figure follows US prices in either direction [2].
I think the cautious reading holds for now. September's new dollars went mostly to bills and dividend payers, and the climb back toward $200 billion is mostly mark-to-market [4] [2]. The strongest counter is the first reading above, that SGOV is spending money parked for a few weeks. It wins if SOXL overtakes SGOV in a month when net purchases also rise well above September's $589 million [4].
What to watch
- Whether Korean holdings of US stocks pass May's $204.161 billion record, and whether net buying or price gains take them there.
- Whether foreign investors resume buying chip shares and Samsung Electronics and SK hynix hold near their highs after Chuseok, the two questions Yuanta's Lee Jae-won set for domestic flows.
- Whether margin loans, back to 32.8192 trillion won, climb toward June's record of 38.6328 trillion won while the KOSPI stays above 7,000.