Foreign Retail Investors Flock to Big Tech... Tesla and Other US Tech Stocks Net Bought

[Asia Economy Reporter Myunghwan Lee] This month, so-called ‘big tech’ stocks were primarily included in the portfolios of Seohak Gaemi (Korean investors investing in U.S. stocks). This appears to be due to increased expectations of benefits for these stocks after the U.S. Consumer Price Index (CPI) for October came in below forecasts.

On the 16th, an analysis by Asia Economy of data from the Korea Securities Depository’s Securities Information Portal (SEIBro) showed that domestic investors focused on purchasing U.S. technology stocks from the 1st to the 14th of this month. Among the top 10 net purchased stocks during this period, eight were technology stocks or exchange-traded products (ETPs) based on technology stocks.

Tesla ranked first in net purchases during this period. Domestic investors net bought Tesla shares worth $241 million (approximately 317 billion KRW). Besides Tesla, big tech stocks such as Amazon (4th), Apple (5th), Meta (6th), and Alphabet (8th) virtually dominated the top ranks.

ETPs based on big tech stocks also ranked highly. The ‘MicroSectors FANG+ Index 3X Leveraged ETN’ (FNGU), a leveraged exchange-traded note (ETN) that tracks major tech stocks threefold, ranked 7th in net purchases. The ‘Direxion Daily Tesla Bull 1.5X Shares’ (TSLL), a single-stock leveraged exchange-traded fund (ETF) that tracks Tesla at 1.5 times, also ranked 9th.

The concentration of Seohak Gaemi’s purchases in big tech stocks seems to be influenced by the recent price weakness of these stocks. Big tech stocks experienced a decline in share prices from late last month through early this month as their third-quarter earnings fell short of expectations. This is interpreted as a bargain-hunting buying spree.

However, price fluctuations varied by stock. Tesla, the top net purchased stock, saw its share price drop more than 16% during this period as its third-quarter sales volume and earnings failed to meet expectations. The single-stock leveraged Tesla ETF also fell about 24%. In contrast, Meta rose nearly 20% amid restructuring measures including layoffs of over 10,000 employees. The leveraged ETF FNGU, which tracks tech stocks threefold, also jumped 15% during this period.

The U.S. October CPI, released on the 10th (local time), also appears to have influenced the buying of big tech stocks. Expectations grew that inflation had peaked and would decline, raising the possibility that the U.S. Federal Reserve (Fed) might slow the pace of interest rate hikes. Consequently, the Nasdaq index surged more than 7% in a single day, showing a short-term rally.

So-eun Ahn, a researcher at KB Securities, said, "The most important factor driving the rise in IT and communication services sector stock prices was the October CPI results," adding, "After the CPI announcement, confirmation of the inflation peak and expectations of moderated monetary tightening boosted multiples (future earnings potential)."

There is also advice against hastily buying in on the short-term rebound. Sanghee Han, a researcher at Hanwha Investment & Securities, said, "Rather than chasing the rally out of a sense of exclusion for missing out, it is a time when risk management is necessary," advising, "It is better to check the inflation data released on December 13 and the subsequent Federal Open Market Committee (FOMC) results before responding."

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