Koreans Buy Tesla, GameStop as Foreign Stock Buying Hits Record

(Bloomberg) -- South Korean traders piled into U.S. stocks like GameStop Corp. and Tesla Inc. in January, driving their buying of overseas equities to a record high in January.

Korean individual and institutional investors bought a net $5 billion of foreign stocks in January, their most-ever monthly tally since 2011, when the Korea Securities Depository began collecting data.

Their positions now include $9.8 billion in Tesla Inc. shares -- the largest for any stock -- as well as about $557 million in GameStop Corp., KSD's data show. GameStop, an unprofitable videogame retailer, has drawn day traders globally, including from India and China.

With U.S. stocks representing some 80% of their holdings, Korean retail investors are “highly exposed” to U.S. market risks, Goldman Sachs senior Asia economist Goohoon Kwon said in a note on Sunday.

“With their heavy buying during a global equity rally in late 2020, a 10% market correction for example could put one-third of their holdings in the red,” Kwon wrote.

GameStop's Wild Ride Has Indian Retail Traders Joining In

Korea's retail investors, having buoyed their domestic markets, turned to the U.S. and especially tech stocks like Tesla and Apple Inc. for returns last year.

The benchmark Kospi surged 31% in 2020, making the Korean bourse the world's best performer after that of Nigeria's.

Regulators in Seoul have been warning retail investors, and especially those indulging in “reckless borrowing” to be cautious about investing overseas.

©2021 Bloomberg L.P.