South Korea's 'ant investors' are marching to U.S. equities even as domestic market hits record highs

• South Korea ranked third globally in U.S. stock purchases in 2025 (behind Singapore and Norway), with retail investors accounting for 60-70% of trading volume and driving most outflows
• The S&P 500 has outperformed the KOSPI in four of the past five years, with individual investors' foreign asset holdings nearly quadrupling since 2020
• Government tax incentives to encourage domestic investment have shown limited success, as South Korea remained the largest net buyer of U.S. stocks in early 2026 at nearly $10 billion

Summary: South Korean Retail Investors Flock to U.S. Equities Despite Domestic Market Strength

Key Facts and Figures

South Korea emerged as the third-largest buyer of U.S. stocks in 2025, trailing only Singapore and Norway (excluding investment hubs like Cayman Islands and Ireland). The country made net purchases of $73.6 billion in U.S. equities—nearly five times the 2024 amount.

This capital flight continues despite South Korea's KOSPI index delivering 75% returns in 2025 and reaching record highs. Retail investors account for 60-70% of annual trading volume in South Korea, with foreign stock purchases more than tripling since 2020.

Main Players and Trends

Korean retail investors, dubbed "seohak ants" (seohak meaning "Western learning"), are driving these massive outflows. Individual investors continue accumulating U.S. stocks while selling non-U.S. foreign assets. In the first two months of 2026 alone, South Korea remained the largest net buyer at nearly $10 billion.

Market Context

While KOSPI outperformed in 2025, the S&P 500 delivered superior returns in four of the past five years. Historical underperformance (KOSPI dropped 9.63% in 2024 while S&P gained 23.31%) has reinforced perceptions that U.S. companies offer better returns and shareholder value.

Government Response

Seoul introduced tax exemptions on capital gains from overseas stocks if proceeds are reinvested domestically for one year. However, analysts remain skeptical these measures will stem outflows, viewing them as potentially effective only in the short term.

Market Implications

This trend signals a structural shift in Korean retail investment preferences toward U.S. markets, potentially pressuring Korean policymakers to enhance domestic market attractiveness and corporate governance standards.