"Catch the Seo-hak Ants" Securities Firms Strengthen US Stock Services... "Invest with Caution"

US Stock Investment Scale Increasing Every Year... 15 Times Growth in 3 Years
From Weekly Overseas Stock Trading to Fractional Shares
No Price Limits... Market System Differs from Domestic, Caution Needed

[Asia Economy Reporter Lee Myunghwan] Domestic securities firms are fiercely competing to attract 'Seohak Gaemi' investors. They have introduced services that allow trading of U.S. stocks, which were previously only tradable at night due to time differences, during daytime hours, as well as services that enable fractional investments by dividing the desired amount for overseas stocks. The reason securities firms are strengthening their overseas stock services is interpreted as the growing scale of overseas stock investments each year.

According to the securities industry on the 1st, domestic securities firms have recently launched services such as daytime trading and fractional trading for U.S. stock customers one after another. Samsung Securities opened the front. On the 7th of last month, Samsung Securities started a U.S. stock daytime trading service. By partnering with a U.S. alternative trading system, it is possible to trade all U.S. stocks from 10:00 AM to 5:30 PM Korean time. Previously, due to the time difference, trading was only possible from 11:30 PM Korean time to 6:00 AM the next day.

Fintech-based securities firms introduced fractional trading services for overseas stocks around the same time. Toss Securities announced that it will launch a fractional trading service this month that allows real-time trading of overseas blue-chip stocks starting from 1,000 KRW. Investors can make small diversified investments in about 2,700 U.S. stocks, exchange-traded funds (ETFs), and exchange-traded notes (ETNs). Kakao Pay Securities also started a similar service at the end of last month. It applies automatic currency exchange and allows investments in overseas blue-chip stocks starting from 1,000 KRW.

The reason securities firms are strengthening overseas stock services is interpreted as the U.S. stock investment becoming significantly active in recent years. According to the Korea Securities Depository, the settlement amount for U.S. stocks through the depository increased significantly from $22.47 billion (about 27.27 trillion KRW) in 2018 to $370.05 billion (about 450 trillion KRW) last year. The transaction amount increased nearly 15 times in just three years.

Domestic investors' investments in the U.S. stock market have continued this year as well. From January to March 30 this year, the average monthly settlement amount for U.S. stocks by domestic investors was $29.1 billion (about 35.36 trillion KRW). Although this is slightly lower than last year's average monthly settlement amount of $30.8372 billion (about 37.52 trillion KRW), considering that the global stock market showed a simultaneous downturn due to the Ukraine war during this period, the decrease in settlement amount is not significant. Looking at the monthly figures, the settlement amount in February was somewhat low at $26 billion (31.59 trillion KRW). The settlement amounts in January and March were $30.826 billion (about 37.42 trillion KRW) and $30.6 billion (about 37.18 trillion KRW), respectively, similar to last year's average settlement amount.

However, there is advice to be cautious because the U.S. market system differs from the domestic stock market. Unlike Korea, there is no daily price limit system, so stock price fluctuations can be much larger in a short period. Unpredictable risks such as delisting due to price trends may also occur. Depending on the type of securities, high taxation rates of over 30% are possible. It is also important to note that settlement delays occur relatively frequently. A Korea Securities Depository official advised, "Since prior information on local U.S. events or tax rates cannot be obtained, thorough information search and careful investment decisions are necessary."