US Stock Market Weakness Increases Selling Pressure Among SeoHakGaemi... "Further Decline Inevitable"

[Asia Economy Reporter Myunghwan Lee] 'Seohak Ants' have been net selling U.S. stocks due to increased market volatility and a strong dollar. Domestic investors' net selling of U.S. stocks surged to around 800 billion KRW last month.

According to the Korea Securities Depository's securities information portal SEIBro on the 4th, domestic investors net bought approximately $12.67137 billion (about 17.27 trillion KRW) of U.S. stocks from the 1st to the 31st of last month, while net selling amounted to about $13.2429 billion (about 18.05 trillion KRW). The net selling settlement amount was approximately $571.53 million (about 779 billion KRW), which is 155.7 times the net selling amount of $3.67 million in July.

As the U.S. stock market showed weakness from the beginning of this year, domestic investors had maintained a net buying trend but shifted to net selling dominance in July. Due to the U.S. stock market weakness and the sharp rise in the exchange rate, net buying stopped, and instead, investors appear to have secured foreign exchange gains from the dollar surge on stocks that rebounded after July.

The U.S. Federal Reserve's (Fed) aggressive tightening concerns and the shock from Fed Chair Jerome Powell's Jackson Hole speech caused the U.S. stock market to decline last month. However, with the KRW-USD exchange rate rising significantly, losses were partially offset, and some investors even profited from foreign exchange gains.

Experts advise a conservative approach to the global stock market, including U.S. stocks, for the time being. Seungwoo Yoo, a researcher at DB Financial Investment, said, "Although the U.S. stock market declined during the first half of this year, valuations still remain at the 20-year historical average level," adding, "We should keep in mind that further valuation declines may occur due to recession concerns following the inversion of short- and long-term interest rates."

So-eun Ahn, a researcher at KB Securities, also stated, "The cumulative impact of tightening will further contract the economy, and additional downward revisions to earnings forecasts are inevitable," but predicted, "A strategy focusing on defensive sectors such as utilities and telecommunications, which are less affected by inflation, a strong dollar, and demand slowdown, remains valid."

Meanwhile, domestic investors were reported to have purchased many exchange-traded funds (ETFs) based on high-dividend stocks or bonds in the U.S. stock market throughout August. Among the top 10 net purchased items by domestic investors, four were ETFs tracking high-dividend stocks or bonds.

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