South Korean retail investors have recently shifted their focus when investing in overseas stocks, moving from US big tech stocks to crypto-related equities amid growing global interest in the sector.
Over the past few months, South Korean individuals investing in overseas stocks have shifted from US big tech equities to crypto-linked stocks, recent data showed, with a focus on stablecoin-related companies.
Meanwhile, net purchases of the top seven US big tech stocks declined nearly 74% from a monthly average of $1.68 billion between January and April to $440 million in May, further dropping to $260 million in July.
According to the report, South Korean investors became net sellers of overseas stocks in May and June but returned to net buying in July with $499 million in purchases. Nonetheless, the new momentum was considerably weaker compared to the $3.8 billion monthly average buying between January and April.
“Since June, the domestic stock market has outperformed overseas markets, while the local currency has strengthened, prompting individual investors to withdraw their investments from foreign markets,” Yonhap News Agency noted, citing the KCIF report.
Amid the US push, stablecoins have also seen growing momentum in several jurisdictions, including South Korea. In June, a member of the Democratic Party of Korea (DPK) proposed a comprehensive legislation to establish a more structured regulatory framework for crypto assets in the country, which included a licensing system for stablecoin issuers.
The financial institutions are also considering a business model in which banks establish a joint venture to collectively issue stablecoins, and have reportedly contacted various non-bank companies to prepare for the legalization and issuance of KRW-pegged digital assets.
