One triple-leveraged chip fund accounts for Korea's whole September flip out of US stocks

Subtract $677.44 million of SOXL sales from a $131.01 million net sale and the rest of the book was bought, by $546.43 million ^[3]. The week that flipped the month works the same way. SOXL net sales of $1.10839 billion against an aggregate net sale of $666.61 million from the 7th to the 11th leaves $441.78 million of net buying everywhere else ^[4].

The monthly sign rests on a thin margin. The two sides of the ledger add to $12.94 billion of gross flow ^[1], and the net sale is about 1% of that ^[2]. June, July and August together came to $7.24 billion of net buying ^[6], so September's net sale is 1.8% of the three months it is described as reversing ^[7][1].

The won did what the report says it did. It fell into the 1,300-won range in the middle of August, improving the terms for US stock investment, and Seoul Economic Daily reports that demand for risk management outweighed the currency effect ^[6]. The paper puts the cause in US interest rates and geopolitical uncertainty, which it says outweighed lower conversion costs and prompted investors to cash out of semiconductor leveraged products that had surged in price ^[7]. Its own won conversion of the net sale implies a rate near 1,343 to the dollar, inside the range it cites ^[8].

"It appears that risk management has strengthened, with investors taking profits on leveraged products that rose sharply in a short period and moving money into short-term bonds and blue-chip technology stocks," an official in the financial investment industry said ^[12]. The buy side supports that reading: net purchases of $129.81 million in SGOV, which holds US Treasuries maturing in three months or less, $93.85 million in IonQ and $73.25 million in Alphabet ^[11]. Those three come to $296.91 million, or 44% of what SOXL raised ^[9].

Two readings fit. On the first, Korean households repriced US risk on rates, in which case the selling should also appear outside the 3x products; net sales of KORU and SK hynix depositary receipts together came to $116.25 million, under a fifth of the SOXL figure ^[10]. On the second, SOXL is where the marginal Korean risk dollar has been sitting, so trimming it after a sharp rise is the signal and the buying elsewhere is consistent with the same caution. The flow data can rank the products but not the causes, and the ranking of rates above currency belongs to the report rather than to the numbers ^[7]. In my view the eleven days show a $677.44 million sale in one triple-leveraged fund ^[8] alongside net buying in everything else ^[3].

The full-month data settles part of this. If net selling spreads into single names and unleveraged funds while the won holds in the 1,300-won range ^[6], the rate explanation carries. If Korean retail comes back into SOXL at a lower price, September was profit-taking in a product that had risen fast ^[7].