SK Hynix ADR was hyped out of a 10% premium, and South Korean retail investors poured $4.5 billion into US stocks in July

Comparing news, Korean retail investors are shifting capital from the local stock market to the US market. According to data from the Korea Securities Depository, Korean investors made a net purchase of about 4.5 billion US dollars of US stocks in July, of which about US$8.4 billion went to SK Hynix's US listing on ADR, making it one of the largest net purchases of US securities by Korean investors.

It is worth noting that Korean investors could have bought SK Hynix directly in the Korean market, but chose to buy its US ADR, causing the stock prices of the two places to clearly deviate. Currently, SK Hynix ADR has a 10% premium over local Korean stocks, and stocks listed in the US are more volatile. Owen Lamont, senior vice president of Acadian Asset Management, believes that this rare price difference may be a sign of excessive market speculation or even a symptom of a bubble.

The shift of South Korean retail investors to US stocks did not reduce their risk appetite, and AI, semiconductors, and highly leveraged products remain core bets. Of the 10 US stocks that Korean investors bought the most in July, 4 were leveraged products. Among them, the Direxion Daily Semiconductor Triple Longer ETF (SOXL) was the most popular.

Meanwhile, the Korean stock market financing balance has dropped from about 37 trillion won at the end of June to about 27 trillion won at the beginning of August. Analysts pointed out that Korean retail investors may simply transfer high-risk AI transactions originally carried out in the local market to the US market rather than actually exit risky assets.

The industry believes that the size of South Korea's capital is insufficient to change the overall trend of US stocks, but its centralized trading may further amplify price fluctuations in highly volatile assets where retail investors are highly concentrated, such as AI chips, quantum computing, and leveraged ETFs.