Retail investors pour money into US index ETFs as AI, semiconductor stocks surge

Retail investors in both the domestic and US stock markets have been channeling their money into ETFs tracking major American indexes.

According to Koscom ETF Check and SEIBRO, the securities information portal of the Korea Securities Depository, three of the five domestically listed ETFs with the largest inflows over the past week tracked either the S&P 500 or the NASDAQ index.

The ETF with the biggest inflows during the week of Sept. 16–22 was KODEX US Nasdaq 100, which drew 277.4 billion won ($204 million). It was followed by TIGER US S&P500 (124 billion won), TIGER Dividend Covered Call Active (82.2 billion won), KODEX US S&P500 (72.5 billion won) and KIWOOM 200 (67.7 billion won).

Over a similar period, Korean retail investors active in US markets — commonly known as "overseas investors" — also snapped up major US index ETFs in large quantities.

From Sept. 17 to 23, these investors net purchased $39.16 million worth of the Vanguard S&P 500 ETF, which benchmarks the S&P 500 index, making it the fifth most bought US-listed security among Korean retail investors during that period.

The buying is widely seen as a bet on further gains in major indexes, driven by a recent rally in AI and semiconductor stocks on US markets.

"The NASDAQ has continued its strong growth-stock performance, hitting consecutive record highs over two trading sessions on Monday and Tuesday (local time)," said Jung Yoon-hee, a researcher at KB Securities. "Market expectations for an easing of geopolitical tensions are also persisting," she added.

Investor deposits — funds parked in brokerage accounts awaiting investment — also climbed back above the 100 trillion won mark. Data from the Korea Financial Investment Association showed that investor deposits stood at 100.98 trillion won on Tuesday, surpassing 100 trillion won for the first time in five trading sessions since Sept. 15 (105.33 trillion won).

Investor deposits, often described as retail investors' "dry powder," hit a record high of 139.69 trillion won on June 4 during a bull-market run, but shrank to 93.55 trillion won on Sept. 4 as the domestic stock market went through a correction.

The balance of margin loans — a gauge of leveraged investing — stood at 32.82 trillion won. The figure represents the outstanding amount investors have borrowed from brokerages to fund stock purchases. A rising balance signals an increase in leveraged investment.

The balance had climbed to an all-time high of 38.63 trillion won on June 24 before falling to 27.04 trillion won on Aug. 4. It has since gradually recovered, hovering around 33 trillion won this month.

The balance of securities lending transactions — considered a reserve pool for short selling — edged up slightly.

The securities lending balance rose 2.6 percent to 165.88 trillion won from 161.64 trillion won the previous week. Securities lending involves investors lending shares to other investors in exchange for a fee.