Although the South Korean stock market has hit bottom and begun to rebound, individual investors are still facing losses. Their accounts remain red as the Nasdaq and S&P 500 indices have declined for three consecutive trading days.
Both Tesla and Nvidia, the most popular stocks among investors, have seen significant declines. However, the greatest losses have come from leveraged exchange-traded funds (ETFs), some of which have lost nearly half their value in just a month.
According to the Korea Securities Depository, domestic investors’ total value of overseas securities reached $128.07 billion at the start of this month. Excluding bonds, the value of stocks held amounts to $93.40 billion, a 22.58% increase from $76.19 billion at the beginning of the year.
Tesla and Nvidia are top picks for overseas investors. As of August 2, Tesla’s holdings reached $12.25 billion, making it the largest investment. Nvidia, a leader in the artificial intelligence (AI) sector, followed with $10.90 billion. Apple and Microsoft Corporation ranked third and fourth, with $4.99 billion and $3.50 billion, respectively.
Investors have also shown strong interest in ETFs. The ProShares UltraPro QQQ (TQQQ) ETF, which tracks the Nasdaq 100 index with 3x leverage, ranks fifth with $2.62 billion in holdings, just ahead of Alphabet at $2.34 billion.
The Invesco QQQ Trust (QQQ) ETF, which also tracks the Nasdaq 100 index, and the ‘Direxion Daily Semiconductor Bull 3X Shares (SOXL) ETF,’ which follows the Philadelphia Semiconductor Index with three times leverage, also hold substantial amounts at $1.82 billion and $1.62 billion, respectively.
Despite the market rebound, the sharp decline in stock prices has hit all of individual investors’ top holdings. Tesla, the most heavily invested stock, fell 12% from August 1 to 6, with a one-month return of -20.68%. Nvidia dropped 7.64% in the same period, leading to an 18.68% loss over the month. Apple and Microsoft also saw declines in August, with their stocks down -6.46% and -4.95%, respectively.
Leveraged ETFs have been hit even harder. The TQQQ ETF declined by 18.08% in August alone and 33.11% over the past month. The SOXL ETF saw an even steeper drop, plummeting 32.66% in August and losing 55.56% over the past month, more than halving its value.
Given its recent steep rise, market analysts are concerned that the U.S. stock market may decline significantly. An industry insider noted, “In Korea, investors must undergo training for leveraged products. In the U.S., the volatility in both upward and downward movements is significant, and no training is required, increasing the risk.” Given the substantial rise so far, they advised investors to be cautious.
