South Korean retail investors’ holdings in U.S. stocks have surpassed $100 billion for the first time. (Image courtesy of Yonhap)
SEOUL, Feb. 24 (Korea Bizwire) — South Korean retail investors’ holdings in U.S. stocks have surpassed $100 billion for the first time, as a new survey reveals that corporate innovation remains the primary attraction driving Korean investors toward American capital markets.
According to a survey released on February 23 by the Korea Chamber of Commerce and Industry (KCCI), 54.5% of Korean investors prefer the U.S. capital markets over their domestic market, while only 23.1% favor the Korean market. The remaining 22.4% expressed equal preference for both markets.
The survey, conducted through KCCI’s online platform Sople on February 17 and 18, polled 1,505 Korean citizens about their investment preferences and motivations.
Corporate innovation and profitability emerged as the leading factors (27.2%) driving investment in U.S. markets, followed by active shareholder returns (21.3%), bearish domestic market conditions (17.5%), U.S. economic prosperity (15.4%), transparent corporate governance (14.8%), and investor-friendly tax policies and support (3.8%).
“While recent amendments to Korean commercial law have focused on strengthening directors’ obligations to protect shareholder interests, our survey shows that investors are primarily attracted to American companies’ innovation and profitability rather than governance structures,” a KCCI official said.
The preference for U.S. markets appears poised to grow, with 79% of respondents indicating plans to increase their U.S. investments, while only 5.7% plan to reduce exposure. In contrast, only 54.3% of respondents plan to increase investments in Korean markets, with 19.1% planning to scale back.
Investors also displayed greater optimism toward U.S. market performance, with 79.3% expecting U.S. stocks to rise compared to 55.2% forecasting gains in Korean markets.
When asked about the Korean market’s underperformance, 34.6% of respondents cited stagnation in corporate innovation as the primary factor. Other concerns included regulation-focused corporate and financial policies (23.6%), short-term investment culture (17.5%), inadequate governance and shareholder returns (15.4%), and insufficient tax support for financial investments (6.8%).
To revitalize the domestic market, respondents prioritized expanding tax incentives for financial investors, including tax benefits for long-term stockholding (26%) and reduced dividend taxes (21.8%). Unlike the U.S., which offers reduced capital gains taxes for holdings exceeding one year, Korea provides no tax benefits based on holding periods. Additionally, Korean dividend income exceeding 20 million won faces progressive taxation up to 49.5%, while U.S. dividend taxes range from 0 to 20%.
Kang Seok-gu, head of research at the KCCI, emphasized that efforts to improve market value should focus on promoting corporate innovation and increasing investor incentives rather than introducing new regulations. “We hope the National Assembly will focus on targeted improvements to capital market laws rather than broad corporate governance regulations,” he said.
Ashley Song (ashley@koreabizwire.com)
