South Korean Investors Pour $3.59B Into U.S. Stocks in July Despite Government Push for Domestic Market

According to Korea Securities Depository, South Korean investors made net purchases of $3.59 billion in U.S. stocks from July 1 to 27, reversing government efforts to redirect capital domestically. The amount was 5.5 times larger than June's $632 million, with particular inflows into leveraged semiconductor ETFs and technology stocks. The Philadelphia Semiconductor Bull 3X ETF (SOXL) recorded $1.76 billion in net purchases alone. This reversal undermines recent government policies, including single-stock leveraged ETFs and the Returning Investment Account (RIA) tax incentive program launched to retain domestic capital.

The capital outflow coincides with surging dollar demand, pushing foreign currency deposits to record highs. Dollar deposits reached $97.8 billion in June, the highest since 2012, according to the Bank of Korea. The tax incentive under RIA is also weakening, with deduction rates declining from 100% initially to 50% starting August 1.