Over 320 billion won flows into domestic leverage ETFs

US stock net purchases hit 11-month high, with SpaceX leading buys

[Getty Images Bank]
[Getty Images Bank]

Amid wild swings in the domestic stock market, Korean retail investors poured money into leverage exchange-traded funds betting on index gains. Those investing in US equities — known locally as "seohak gaemi," or Western-market ants — also ramped up purchases of technology stocks, pushing this month's net purchases of US shares to an 11-month high.

According to Yonhap and other sources, the KODEX Kosdaq150 Leverage ETF attracted 174.4 billion won ($131 million) in inflows during the week of Oct. 23 to Oct. 29, the third-largest inflow among all ETFs over the period.

The KODEX Leverage ETF ranked fourth, drawing 148.7 billion won in inflows.

The Kospi rose for two consecutive sessions on Tuesday and Wednesday, closing at 6,012.44, which analysts say fueled buying interest in leverage ETFs among investors anticipating further index gains.

Still, a significant amount of capital also moved into products designed to weather heightened volatility. The market swung sharply enough during the week to trigger a sidecar — a temporary suspension of program trading orders — three times, driving flows into relatively stable products as well.

Products resilient to volatile markets also continued to attract heavy inflows: KODEX Money Market Active ranked first with 732.7 billion won, while TIGER Dividend Covered Call Active came in second with 239.3 billion won.

Among individual stocks, SpaceX was the top net purchase by Korean retail investors in US markets for the week, with net buys totaling $221.83 million.

SpaceX drew investor attention after posting its first quarterly profit since listing, with a Tesla merger also being floated as a possibility.

Expectations that SpaceX's share price could rise alongside Anthropic's anticipated NASDAQ listing may also have played a role. Bloomberg reported Thursday (local time), citing sources, that Anthropic was the single customer accounting for one-third of SpaceX's third-quarter sales.

Beyond SpaceX, Korean retail investors also made sizable net purchases in major individual technology stocks, including Alphabet, which ranked third at $83.36 million, and Micron, which ranked fifth at $74.68 million.

Among ETFs, QLD — which tracks twice the daily return of the NASDAQ 100 index — ranked second with $86.41 million in net purchases, while TQQQ, which tracks three times the daily return, ranked fourth at $80.44 million.

Net purchases of US stocks by Korean retail investors reached their highest level in 11 months.

From Oct. 1 to Oct. 29, Korean retail investors' net purchases of US equities totaled $5.42 billion, up 5.4 times from the previous month and the highest since last November, when net purchases reached $5.93 billion.

The surge is seen as a sign that domestic investment capital is flowing back toward the US market as the Kospi falls sharply and the won strengthens.

Meanwhile, investor deposits — a gauge of market sideline cash — and the balance of margin loans, a measure of debt-fueled investing, showed little change over the week.

According to Korea Financial Investment Association data, investor deposits stood at 88.72 trillion won on Thursday, roughly in line with the 88.68 trillion won recorded on Oct. 22.

Over the same period, the margin loan balance edged down slightly, from 30.36 trillion won to 29.09 trillion won.


arete@heraldcorp.com