Surge in South Korean Investment in U.S. Stocks
The stock market in South Korea has reached impressive heights over the past year, yet interest in U.S. stocks persists among Korean investors. Projections suggest that by 2025, South Korea will rank as the third-largest purchaser of U.S. stocks, following Singapore and Norway, as deduced from U.S. Treasury data, which does not consider investment havens like the Cayman Islands or Ireland.
In fact, South Korea’s net investment in U.S. stocks is expected to hit $73.6 billion by 2025—nearly five times the amount from 2024. This buying trend is mirrored within the nation’s own market, with the Kospi index achieving a remarkable 75% return last year and reaching new highs this year.
The growing investment in U.S. stocks is reflected in the significant proportion these assets hold in South Korea’s foreign portfolio. A recent report by the Bank of Korea indicates that U.S. investments constituted 63.4% of the country’s total foreign portfolio, a stark contrast to 25.3% in developed nations and 36.8% in emerging markets.
Sohakuari: The Rising Individual Investors
Many analysts point out that a large chunk of this investment surge can be attributed to individual investors. There are around 15 million individual investors in Korea, accounting for about 60-70% of the trading volume annually, according to GAM Investments. Data from the Korea Securities Depository Center shows that while these investors have been selling other foreign assets, they are simultaneously purchasing U.S. stocks, indicating a clear preference for them.
In Korea, individual investors who engage in foreign stock purchases are often referred to as “sohakuari,” derived from the term for “Western learning.” This term has become associated with the local investors who are increasingly turning to foreign markets.
Daniel Yoo, head of global asset allocation at Korea Yuanta Securities, emphasized that these retail investors view the U.S. market as particularly attractive, owing to its potential for greater returns. Coupled with a generally positive sentiment towards the U.S. market, it creates a compelling case for investing there. Not to mention, the Kospi has performed well compared to the S&P 500 and Nasdaq, with the S&P having outperformed local benchmarks in four of the last five years. Thus, the allure of U.S. stocks remains strong, even in 2025.
With a weakening domestic market looming ahead, individual investors have redirected their focus towards the U.S. market, which presents opportunities for higher gains. Kang Min-joo, a senior economist with ING for South Korea and Japan, noted that investments in overseas assets have substantially increased, nearly quadrupling compared to 2020.
Further insight from Yoo revealed that American companies frequently provide better returns to their shareholders through dividends and stock buybacks, making them appear more transparent and investor-friendly than their Korean counterparts.
Government Responses to Capital Outflows
In response to these capital outflows, the South Korean government has implemented initiatives aimed at curbing them. Recently, the Ministry of Finance announced tax exemptions for retail investors who divest from foreign stocks, provided they reinvest in domestic stocks under certain conditions.
However, analysts remain doubtful that such measures will be effective in stemming the current trend of “ant investors” moving their money abroad. Florian Weidinger, CEO of Santa Lucia Asset Management, commented on the challenges the government faces in fostering a robust domestic equity culture that could compete with the more lucrative real estate market.
Despite governmental measures announced in December, South Korea continued to be the largest net buyer of U.S. stocks in early 2026, purchasing around $10 billion in just the first two months. Yoo believes that the tax cuts could have a limited short-term impact on investor behavior, given the strength of the Kospi, but noted that they may not be enough to fully shift investor preferences away from U.S. stocks.
