In October, U.S. stock purchases by domestic investors hit a record high for the year. As the KOSPI plummeted over 16% in a month and the USD-KRW exchange rate fell to its lowest level this year, more Korean retail investors, often dubbed ‘ants,’ shifted their focus to U.S. equities. However, the weakening exchange rate has put pressure on existing U.S. stock investors by reducing their returns when converted to KRW.
Data from the Korea Securities Depository’s Saveuro portal shows that last month, domestic investors’ net purchases of U.S. stocks totaled 5.42 billion USD. This figure surpasses January’s previous record, marking the highest level of net purchases in 2026.
After selling U.S. stocks in April and May, domestic investors have maintained a net buying trend for five consecutive months since June.
This shift likely reflects investors redirecting their capital to foreign markets as the domestic stock market experienced significant corrections.
The KOSPI has seen increased volatility since peaking in late June. October saw a notable 16.2% drop, marking the third-largest monthly decline this year, following July’s 22.2% and March’s 19.1% falls.
Last month, individual investors in Korea net purchased 3.35 trillion KRW (about 2.5 million USD) in the KOSPI market, returning to a buying position after two months. However, given the decreased trading volume, this shift alone doesn’t necessarily signal a revival in domestic stock market enthusiasm.
The KOSPI’s average daily trading volume last month was 20.37 trillion KRW (about 15.2 million USD), down from 21.36 trillion KRW (about 16 million USD) in September, marking the lowest level so far this year.
The declining USD-KRW exchange rate is also cited as a factor driving demand for U.S. stocks.
After peaking in early July, the USD-KRW exchange rate continued to fall, hitting 1,320.6 KRW (about 1 USD) during October trading, a new yearly low. The strengthening won allows investors to purchase more dollars with the same amount of Korean currency.
However, for those already holding U.S. stocks, the falling exchange rate is eroding returns.
For example, an investor who bought U.S. stocks on July 1, when the USD-KRW exchange rate was 1,559.2 KRW (about 1 USD), would face a loss of about 14.4% in won terms as of October 30, even if stock prices remained unchanged. This illustrates how exchange rate fluctuations alone can significantly impact investment values.
Some forex market analysts predict the USD-KRW exchange rate could enter the 1,200 KRW (about 1 USD) range in the first half of next year, driven by a dollar surplus from semiconductor companies’ export revenues.
Lee Jeong-hoon, an analyst at Daishin Securities, commented that while the stock market is grappling with concerns over the semiconductor industry’s long-term outlook, the forex market is currently awash with dollars. This supply-demand dynamic is likely to remain strong at least through next year. He added that given these factors and the anticipated dollar weakness in early 2027, it expects the exchange rate to test the 1,200 KRW (about 1 USD) range in the first half of the year.
