Foreign Retail Investors, Will the Tesla and Meta Accumulation Strategy Succeed?

Concerns Over Earnings Plunge Tech Stocks Interest
Direct Buyers Most Purchased 'Tesla'
Shift from 'One-Shot Betting' to 'Low-Price Buying'

Nasdaq Weakness Feared Due to Rising Interest Rates
Uncertain If Profits Will Continue

[Asia Economy Reporter Minji Lee] The portfolio of Seohak Gaemi, investors who invest in overseas stocks, is changing. While they sought large profits by buying leveraged ETFs last month, this month they are purchasing large tech stocks whose prices have fallen excessively due to concerns over earnings.

According to the securities information system SaveRo on the 10th, the most purchased stock by direct overseas stock buyers up to this month was Tesla. With a net purchase amount of 386.8 billion KRW, it reclaimed the top spot in net buying after about a month. Last month, when the Nasdaq index plummeted more than 10% due to the US Federal Reserve's early rate hike remarks, investor sentiment excessively concentrated on the 'PROSHARES ULTRAPRO QQQ ETF,' which seeks three times the rise of the Nasdaq 100 index. The monthly purchase amount reached about 1.8 trillion KRW.

While last month saw massive investment in leveraged ETFs that can yield 2 to 3 times the return of the underlying index, this month investors are focusing on stocks whose prices have fallen excessively. Seohak Gaemi have shifted their strategy from 'one-shot betting' to 'buying at low prices.'

Tesla has plunged 22% just this year. Although it announced solid earnings in the fourth quarter of last year, it fell after announcing a delay in new car launches this year due to semiconductor supply chain issues. The market was more shocked because Tesla, unlike global automakers struggling with supply chain breakdowns, had less impact due to in-house production of key components. Concerns also grew due to the increased initial fixed costs from the operation of new plants in Berlin and Texas.

However, domestic investors appear to be increasing their net purchases by focusing on Tesla's leading position in the electric vehicle market and its advanced FSD (Full Self-Driving) technology. Lee Sang-hyun, a researcher at IBK Investment & Securities, explained, "Although short-term uncertainty is high, profitability is expected to improve in the long term based on software," adding, "Tesla aims to achieve FSD that is safer than humans and plans to launch insurance services in Europe by the end of this year."

Meta, which operates Facebook and Instagram, ranked second in net purchases, with a total net purchase amount approaching 113.3 billion KRW. Meta has fallen 30% this year, contributing to the decline of the Nasdaq index. Until early this month, its stock price hovered around $320 to $340, but after its earnings announcement, it plunged more than 20% in one day to $230. The stock price was negatively affected by the announcement that Apple's changes to privacy regulations could significantly shrink the advertising segment, a major revenue source. Additionally, domestic investors have meaningfully invested in PayPal (17.7 billion KRW) and Netflix (16.3 billion KRW), which lowered their earnings guidance this year.

However, it is uncertain whether Seohak Gaemi's investments will translate into profits. There are concerns that rising interest rates could lead to weakness in the Nasdaq market. Securities experts say that while bargain buying may briefly occur in stocks with large declines, they are cautious about a sustained rebound. Kim Dae-jun, a researcher at Korea Investment & Securities, said, "Employment stability is directly linked to interest rate hikes, and since US employment indicators, unemployment rate, and non-farm payrolls have been favorable, there is room for the US 10-year Treasury yield to rise further," adding, "Recently rising Nasdaq companies were those with secured profits like Microsoft and Amazon, so it is advisable to focus on companies with high-quality earnings."

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