Individual investors are fascinated by U.S. growth stocks

Individual stock investors in South Korea, currently making great contributions to the stock market, are shifting their attention to foreign stock markets. The so-called “Seohak Ants,” meaning individual stock market traders who invest in foreign stock markets, purchase a great deal of U.S. growth stocks while indulging in day-trading to seek for instant gains.

Tesla is an overseas stock with the biggest volume of net charging transacted by domestic investors - individuals and corporate bodies – in South Korea from the start of the year to Aug. 21, according to the Korea Securities Depository’s report on Friday. The top six stocks mainly are tech giants such as Apple, Microsoft, Google’s public holding company Alphabet Inc. and Amazon, except for Hasbro, a toy manufacturer, at 4th place. The report shows how strongly Seohak Ants are attracted to the U.S. stock market and growth stocks. Eight out of the top 10 are growth stocks while nine on the top 10 rankings are transacted in the U.S. stock market.

One of Seohak Ants in 30s invested 10 million won in Nikola Motor, a U.S. hydrogen carmaker, when it went public in the New York Stock Exchange in June. Just over several days, the investor took advantage of distribution stocks to earn five hundred won. “Foreign stock markets used to be a destination mainly for a handful of rich people who wanted to diversify their asset portfolio. However, we are seeing an influx of young investors. They buy Tesla, Apple, Moderna and other growth stocks,” said a manager at Hana Financial Investment. Meanwhile, U.S. individual investors with ever-increasing influence buy up traditional and long-standing stocks, which have recently seen a drop in prices since the COVID-19 pandemic. U.S. business news website Business Insider says that Ford, General Electrics and American Airlines are the top three popular stocks of July among traders on Robinhood, a U.S. stock-trading smartphone application.

Critics analyze that South Korean stock individuals, accustomed to the domestic market returning a fraction of dividends, tend to stick to day-trading and short-term gains even in overseas markets where large amounts of dividends await. An individual investor in 40s spent five million won on Nanox, an Israeli next-generation X-ray developer, on Monday, the very next trading day after it was listed in the U.S. stock market last Friday. Buying it at 23.1 dollars, he sold it at 30 dollars to earn a 30-percent trading margin.

Having said that, foreign stock investment is not always the golden ticket for big money. Another individual stock investor saw a 10-percent loss after the person sank 70 million won into Ali Health, a telemedicine service provider of Alibaba Group, which went public in the Hong Kong Stock Exchange. Financial experts advise domestic investors to be careful about laying out money for foreign markets and businesses because they are likely to know little about them.


Yoo-Hyun Kang yhkang@donga.com · Na-Ri Shin journari@donga.com