SEOUL, May 17 (Korea Bizwire) – The number of domestic investors who buy and sell overseas stocks directly without the mediation of brokers is on the rise rapidly. Up until now, most investors had to purchase stock funds in order to make investments in foreign stocks. This pattern has emerged since last year.
According to the Korea Securities Depository, the balance of overseas stock investment during the first quarter of this year was US$1,760 million, up 361 percent from the same quarter last year. The volume of stock investment overseas last year was $5,477 million, up 85 percent from 2012.
By country of investment destination, Hong Kong took the No. 1 position at 1,275.9 billion won, followed by Japan (1,158.2 billion won) and the United States (1,109.9 billion won). Other European countries such as the United Kingdom (166.9 billion won) and Germany (52.7 billion won) were within the top-ten list.
The EU countries that are recovering from the fiscal crisis, including Italy (25.7 billion won), Greece (3.8 billion won), Spain (800 million won), and Ireland (600 million won) were also investment targets. Some Southeast Asian nations such as Vietnam (10.6 billion won) and Thailand (400 million won) whose stock markets are growing at a torrid pace were also targets of domestic investors.
In terms of number of stocks traded, the United States was the highest with 2,334 stocks traded by domestic investors, followed by Hong Kong (998) and Japan (313). The single stock to which Korean investors paid most attention during the first quarter was Tesla Motors, the electric car manufacturer, whose quarterly trading amount was 83.5 billion won.
During the same period, the investors bought up shares of Apple and Google worth 66.4 billion won and 34.7 billion won, respectively. They also put their money in a variety of exchange-traded funds in the U.S. and Japanese stock exchanges.
As for the main reasons for the change in investment patterns, investment professionals said a perception is widely shared among domestic investors that there is no future for domestic stock markets. Especially given the domestic markets have been at standstill for years since the 2008 financial crisis, there are some overseas markets showing quick recovery, which came as an attraction point for some domestic investors.
The recent strength of the won vis-à-vis the U.S. dollar is another reason for Korean investors to look farther afield, the professionals said.
Written by Sean Chung (firstname.lastname@example.org)