South Korea’s ‘ant investors’ flock to US equities even as domestic markets hit record highs

South Korean stocks have been hitting record highs over the past year, but that hasn’t diminished the attractiveness of US equities for its residents.

In 2025, South Korea was the third-largest buyer of US stocks, behind Singapore and Norway, according to CNBC calculations of US Treasury data. Investment centers such as the Cayman Islands and Ireland were excluded.

The country plans to buy a net $73.6 billion in US stocks in 2025 – almost five times more than in 2024. US stocks continue to rise despite South Korea’s benchmark Kospi The stock index returned 75% last year, and has hit new highs this year.

South Korea’s preference for US equities is also reflected in their large stakes in the country’s foreign portfolio.

A Bank of Korea report Last week it was revealed that US investments accounted for 63.4% of the country’s overall foreign portfolio, far higher than the 25.3% for advanced economies and 36.8% for emerging economies.

According to experts, a significant portion of this massive withdrawal is owed to individual investors. is about south korea 15 million retail investors It accounts for 60% to 70% of annual trading volume, according to investment platform GAM Investments.

Data from the Settlement System of Korea Securities Depository – widely used A proxy for retail investor activity – shows that net purchases US equities crossed Total net foreign purchases, meaning investors were selling non-US assets while continuing to buy US stocks.

Retail investors who buy foreign stocks are known as “Seokhak ants” in South Korea. Seohak translates to “Western education”, but is now used to refer to Korean retail investors (often referred to as ants) buying foreign stocks.

Daniel Yoo, global strategist and head of global asset allocation at Yunta Securities Korea, said retail investors are responsible for this rush to US equities. “Retail investors are becoming more appreciative of the attractiveness of US market investing.”

Potentially higher returns and the country’s positive sentiment towards the US market are attracting retail investors to US stocks.

Kospihas better performance with respect to S&P 500 And nasdaq 2025 has done nothing to diminish the appeal of US equities, as the S&P 500 has posted superior returns in four of the last five years.

Facing a sluggish domestic market before 2025, retail investors turned their attention to the US market, which provided higher returns, said Kang Min Joo, senior economist for South Korea and Japan at ING.

“For individuals this year, compared to 2020, their investments in foreign assets are more than three times higher, or almost four times higher than 2020,” he said.

U.S. companies are also seen as more shareholder-friendly and transparent, with a track record of rewarding investors through dividends and buybacks, and stronger corporate governance than South Korean companies, Yoo said.

Government announced If the income is invested in domestic shares for a year, subject to certain conditions, it will exempt taxes on capital gains from foreign shares.

However, analysts are skeptical that the government’s steps will stem the exodus of “ant investors.”

Florian Weidinger, CEO of Santa Lucia Asset Management, told CNBC that recent efforts in South Korea have attempted to create a strong home equity culture that encourages wealth creation away from the property market, but locals do not seem convinced.

The South Korean government announced the measures in December last year, but the country was still the largest net buyer of US stocks with about $10 billion in the first two months of 2026 combined, excluding the Cayman Islands and Ireland.

Yuanta Securities Yu said the measures may work “partially”, yielding some fruits in the short term as the Kospi’s performance remains strong, but he said the tax breaks were not enough to keep investors away from US stocks.