Korean retail investors are shaking things up in the US stock markets, and Wall Street is taking notice. In August, they left Tesla Inc. in record numbers, taking $657 million with them. This year, they also put an amazing $12 billion into US-listed cryptocurrency companies. Let's talk about changing the way we invest!
Tesla's Fall from Favor in Korea
Tesla used to be the favorite stock of Korean investors, but now it has lost its shine. Bloomberg says that the $657 million that left Tesla in one month is the biggest sell-off since early 2023. This is a big change for Korean investors, who used to be the ones who drove Tesla's stock up. It looks like their faith in the electric vehicle giant is fading, as many people are doubting the company's AI story and future growth.
Korean investors own about $21.9 billion worth of Tesla shares, which makes it their biggest foreign equity holding. They are getting nervous about Tesla's declining fundamentals and CEO Elon Musk's unpredictable behavior. Analysts say that the stock's ups and downs are mostly due to more competition from Chinese companies and falling sales of electric vehicles, which are partly due to Musk's fight with President Trump.
Park Yeon-ju of Mirae Asset Securities said it best:
"Tesla's strong medium-term prospects in autonomous driving and humanoid robotics have been overshadowed by the recent AI boom, which has made competition stronger and lowered expected margins and market share."
But it's not just the stock of Tesla that's in trouble. In August, even the double-leveraged Tesla ETF (TSLL) saw a huge $554 million outflow. It looks like Korean investors are losing faith in everything the company does.
Korean Investors Put All Their Money into Crypto
Korean investors are pulling out of Tesla, but they are going all in on US-listed cryptocurrency companies. This year alone, they've put more than $12 billion into stocks related to cryptocurrencies. And it's not just a little bit; they bought $426 million worth of Bitmine Immersion Technologies, $226 million worth of Circle stock, and $183 million worth of Coinbase shares in August.
But things get better. Korean investors didn't stop there. They also bought a 2x Ethereum ETF for $282 million, which shows that they're not just being careful with crypto; they're going all in and using traditional stock markets to get deep into digital assets.
People on Wall Street are paying attention to this aggressive buying spree, and for good reason. South Korea is far ahead of the rest of the world, where only about 20% of the population is now invested in cryptocurrencies. For Koreans under 30, that number goes up to 25–27%. It's not surprising that this crypto craze is having such a big effect on the US market.
Regulatory Winds in South Korea Push the Surge
Good news about regulations in Korea is driving Korean investors to buy a lot of crypto. Regulations for stablecoins, crypto ETFs, and STOs are getting stricter in South Korea, and policymakers are starting to like the idea of making crypto a part of the economy. This clear set of rules is making Korean investors more sure that they can put even more money into crypto assets.
You can't ignore Korean investors. Not only are they changing the way Tesla works, but they're also changing the way money moves around the world. Korean retail investors are changing the game, so Wall Street, you've been warned.
Gunel Ismayilova
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