Overseas Stock Trading Surpasses $100 Billion for the First Time in History

[Asia Economy Reporter Koh Hyung-kwang] This year, the trading volume of overseas stocks surpassed $100 billion (approximately 120 trillion KRW) for the first time ever. It surged about tenfold in just five years since it first exceeded $10 billion in 2015. Analysts attribute this to the surge of retail investors emerging after the COVID-19 pandemic, who have shown interest in stocks from other countries, continuing the craze for direct overseas stock purchases.

According to the Korea Securities Depository on the 24th, as of the 21st, the total settlement amount (purchase + sale) of overseas stocks by domestic investors this year was $102.446 billion. This is 2.5 times the overseas stock settlement amount last year ($40.985 billion, approximately 50 trillion KRW), marking the highest ever since the Korea Securities Depository began tracking foreign currency securities settlement amounts in 2011.

Moreover, it took only three months to surpass $100 billion after breaking the $50 billion mark on May 26. If this trend continues, it is expected that this year’s trading volume could exceed $150 billion (approximately 180 trillion KRW). The net purchase amount this year has already exceeded $11.2 billion (about 13 trillion KRW).

The overseas stock settlement amount, which was only $3.1 billion in 2011, first exceeded $10 billion in 2015 ($13.9 billion). Although it slightly slowed to $12.6 billion in 2016, it grew steadily in recent years with $22.7 billion in 2017, $32.5 billion in 2018, and $40.9 billion in 2019, increasing by about $10 billion each year. This year, due to the COVID-19 outbreak and the sharp decline in major global stock markets including the U.S., many individual investors entered the stock market aiming to buy at the bottom, leading to an expected remarkable growth compared to the previous year.

The main focus of investors buying overseas stocks was the United States. Overseas investors bought and sold a total of $89.3 billion worth of U.S. stocks from the beginning of this year until the 21st, accounting for 87.2% of the total overseas stock trading volume this year. Compared to the same period last year ($18.7 billion), this is a 4.7-fold (375.5%) increase. During the same period, Hong Kong stock trading volume increased by 119.8% from $3.46 billion to $7.488 billion, China’s increased by 97.3% from $1.226 billion to $2.419 billion, and Japan’s rose by 73.9% from $1.193 billion to $2.076 billion. However, the Euro market decreased by 25.9%, from $516 million to $382 million.

Most of the stocks that investors traded the most were also primarily listed on the U.S. stock market. Among the top 50 traded stocks, 90% (45 stocks) are companies listed on U.S. exchanges. The remaining five are from Hong Kong. The top-ranked stock is Tesla, the American electric vehicle company, with $8.279 billion worth of trades from the beginning of this year until the 21st. Next are Apple ($4.246 billion) and Microsoft ($3.797 billion), both beneficiaries of the untact (contactless) sector, ranking second and third respectively. In terms of net purchase amount, the top three remain unchanged: Tesla ($1.385 billion), Apple ($1.05 billion), and Microsoft ($628 million).

The overseas stock craze is interpreted as a result of the strong upward trend in overseas stock markets centered on the U.S. It reflects the sentiment of investors wanting to invest in markets that have steadily risen, escaping the domestic stock market characterized by a prolonged low-growth trend. Kim Jin-young, a researcher at Kiwoom Securities, said, "As market volatility increases, there is a tendency for investments to concentrate on large-cap and blue-chip stocks, and investors have judged that investing in U.S. stocks, which have shown growth potential and higher returns than domestic stocks, is better." He added, "This trend is expected to continue for the time being."

This content was produced with the assistance of AI translation services.