"KOSPI Slump Draws Korean Retail Investors' Attention to US-China ETFs"

Published 10 Apr.2022 16:51(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Domestic individual investors have turned their attention to exchange-traded funds (ETFs) linked to the US and China amid the sluggish KOSPI, Bloomberg reported on the 9th (local time). In particular, there was strong interest in overseas thematic ETFs such as US tech stocks and Chinese electric vehicles.

Bloomberg stated, "While the KOSPI fell 9% over the past six months due to concerns over US interest rate hikes and rising oil prices, the S&P 500 index rose 2%."

According to the Korea Exchange, domestic individual investors purchased ETFs worth 6.9 trillion won over the past six months. Lim Tae-hyuk, head of the ETF management team at Samsung Asset Management, said, "Domestic investors have great interest in overseas markets," adding, "In the past, when creating thematic ETFs, we tried to attach the names KOSPI and KOSDAQ, but that is no longer the case."

During the COVID-19 pandemic, domestic individual investors were a key force in the Korean stock market. Bloomberg noted, "They accounted for three-quarters of daily trading volume and earned the nickname 'ants' due to their collective behavior."

According to Bloomberg, the current equity return of the S&P 500 index is about 11 percentage points higher than that of the KOSPI. Lim explained, "Individual investors are diversifying their investments by pouring money into bonds and high-dividend stocks as well."

He added, "Domestic investors who had flocked to stocks recently realized, through market corrections, that they might have been too aggressive."