Ants' ETF Net Buying Bets: "US for Rise and Long-Term... Korea for Decline and Short-Term"

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[Asia Economy Reporter Lee Seon-ae] Individual investors have been betting on rises in the U.S. stock market while betting on declines in the Korean stock market. In particular, while the U.S. stock market is favored for long-term investment based on confidence in index growth, the Korean stock market tends to be used for short-term investment as a hedge (risk avoidance) tool.

According to the Korea Securities Depository and Korea Exchange as of the 16th of this month, domestic investors have most actively net purchased the 'SPDR S&P500 ETF' (ticker SPY) among ETFs listed on overseas stock markets this year. The net purchase amount was $291.09 million (KRW 331.7 billion). In contrast, among domestic index-related ETFs this year, the 'KODEX 200 Futures Inverse 2X' ETF was the most net purchased. The net purchase scale was KRW 601 billion, making it the second largest among all ETFs listed on the domestic stock market, following 'TIGER China Electric Vehicle SOLACTIVE' (KRW 664.7 billion).

The SPY ETF tracks the S&P 500 index. On the other hand, the 'KODEX 200 Futures Inverse 2X' is a so-called 'double inverse' ETF that tracks twice the inverse of the daily fluctuation rate of the KOSPI 200 futures index. The opposing directions of these investment indices appear to be the result of individuals using domestic index ETFs and overseas index ETFs differently.

First, domestic index leverage and inverse ETFs are often used mainly for short-term investment or as hedging (risk avoidance) tools. In fact, looking at the monthly net purchase status of ETFs by individuals, when the KOSPI showed strength last month, individuals net purchased KRW 314.9 billion of 'KODEX 200 Futures Inverse 2X' while net selling KRW 195.4 billion of 'KODEX Leverage' ETF. 'KODEX Leverage' tracks twice the daily fluctuation rate of the KOSPI 200 index in the positive direction. Since the beginning of this month, as the KOSPI showed weakness, individuals net sold KRW 212.1 billion of 'KODEX 200 Futures Inverse 2X' and net purchased KRW 100.6 billion of 'KODEX Leverage'.

In the case of the U.S. stock market, it is analyzed that index ETFs are used as long-term investment tools rather than short-term investments due to confidence in long-term growth. In fact, it is not difficult to find posts online about investing in U.S. S&P 500 ETFs through installment savings. As of the 16th, the valuation of domestic investors' holdings in SPY ETF was $658.65 million (KRW 750.5 billion).

Kim Hoo-jung, a researcher at Yuanta Securities, explained, "It might be because the U.S. stock market has shown long-term growth," adding, "Looking at the large inflows not only into ETFs but also other overseas funds, many are related to U.S. funds such as global technology." He further explained, "Korean investors used to invest heavily in emerging markets like China and Vietnam, but now the focus has shifted to developed countries," and added, "For long-term investment, U.S. funds seem to be preferred."

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