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

South Korean stocks rose to record highs last year, but that hasn’t diminished the appeal of U.S. stocks for residents.

South Korea is the third-largest buyer of U.S. stocks in 2025, behind Singapore and Norway, according to CNBC’s calculations of U.S. Treasury data. Investment centers such as the Cayman Islands and Ireland were excluded.

The country purchased a net $73.6 billion in U.S. stocks in 2025; this is almost five times that in 2024. Despite South Korea’s benchmark stock markets, the rush on US stocks continues. kospi The stock index returned 75% last year and has reached new highs this year.

South Korea’s preference for US stocks is also reflected in the large share of the country’s foreign portfolio.

A. Bank of Korea report Last week, it was revealed that the share of US investments in the country’s overall foreign portfolio was at 63.4%, well above the 25.3% in developed economies and 36.8% in developing economies.

According to experts, a significant part of these large outflows originate from individual investors. South Korea’s approx. 15 million individual investors It accounts for 60% to 70% of annual trading volume, according to investment platform GAM Investments.

Data from the Korean Securities Depository’s clearing system – commonly used as: a proxy for retail investor activity – indicates net purchases US stocks exceeded Total net foreign purchases mean investors are selling non-U.S. assets while continuing to buy U.S. stocks.

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

Daniel Yoo, global strategist and head of global asset allocation at Yuanta Securities Korea, said individual investors are responsible for this rush into U.S. stocks. “Retail investors are much more appreciative of the attractiveness of U.S. market investments.”

Potentially higher returns, as well as the country’s positive perception of the US market, are driving retail investors towards US stocks.

kospisuperior performance regarding S&P 500 And Nasdaq The rally in 2025 has done little to diminish the appeal of U.S. stocks, as the S&P 500 has outperformed the domestic benchmark in four of the past five years.

ING South Korea and Japan senior economist Kang Min Joo said that facing a stagnant domestic market ahead of 2025, retail investors are shifting their attention to the US market, which offers higher returns.

“This year, individuals’ investments in foreign assets have more than tripled compared to 2020, that is, almost quadrupled compared to 2020,” he added.

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

Government announced It said capital gains from overseas stocks will be exempt from tax if invested in domestic stocks for a period of one year, subject to certain conditions.

However, analysts remain skeptical that the government’s steps will prevent the migration of “investor ants”.

Although recent efforts in South Korea have sought to create a stronger domestic capital culture that encourages wealth creation away from the real estate market, locals do not seem convinced, Florian Weidinger, CEO of Santa Lucia Asset Management, told CNBC.

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

Yoo of Yuanta Securities said the measures may “partially” work and bear some fruit in the short term as Kospi’s performance remains strong, but added that tax cuts are not enough to keep investors away from US stocks.