Korean investors dump home stocks for US ones, buy same names at a premium | Is KOSPI-style crash coming to Wall Street? | Stock Market News

South Korean retail investors seem to be losing confidence in their home market and are increasingly looking to US stocks instead. Many sold domestic shares for most of last week, even as the benchmark index entered a bull market.

“But, the interesting part is these investors are not necessarily reducing risk, but they are shifting where they take that risk,” says Paresh N. Bhagat, MD & Chairperson of Mangal Keshav Financial Services.

South Korean investors bought a net $4.5 billion in US stocks in July, but their preference remains for technology, semiconductors, and leveraged products rather than a purely diversified US exposure. For example, about $840 million went into SK Hynix’s US-listed depositary receipts, even though they can buy SK Hynix shares directly in South Korea at a much lower price.

“This is exactly why the South Korean market crashed,” says Bhagat.

The spectacular rise in the KOSPI was driven by Samsung Electronics and SK Hynix. During the first half of 2026, the KOSPI rose roughly 120%, while Samsung was up around 170% and SK Hynix more than 300%. That concentration worked exceptionally well on the way up, but became equally powerful in reverse.

The move towards Wall Street is partly a search for a deeper and more diversified market, but there is an important caveat. Korean retail investors are carrying much of the same playbook with them – Technology, semiconductors and leveraged ETFs.

“So, these investors aren’t abandoning the AI story yet; they’re just switching to US AI tickers rather than homegrown companies, since the US market is more liquid, more developed, and more evolved than the South Korean market,” points out Shruti Jain, Chief Strategy Officer, Arihant Capital Markets

Apart from that, a weaker won also made the US markets more attractive and acted as a natural hedge, Jain asserts, adding, “Whenever any domestic currency sharply corrects, sending money into dollar assets generally looks more attractive for investors globally.”

South Korean money by itself is unlikely to cause a Korea-like crash on Wall Street. “The US equity market is vastly deeper, more liquid, and more diversified, so even several billion dollars in monthly Korean retail flows are relatively small in that context,” says Bhagat.

“However, the lesson from Korea is relevant because the US is showing some of the same ingredients: concentration, enthusiasm around a narrow group of companies and increasing leverage, although not yet to the same degree.” For example:

First, at its extreme, Samsung and SK Hynix alone accounted for around 50% of the Korean benchmark's market capitalisation. In the US, concentration is lower but still historically elevated: the Magnificent Seven account for roughly one-third of the S&P 500, while the ten largest companies represent close to 40%. Semiconductor exposure alone effectively represents around 19 cents of every dollar allocated to the S&P 500.

The second similarity is leverage. Assets in leveraged US ETFs have risen to approximately $218 billion, with technology and semiconductor products accounting for around 67% of that amount. US margin balances have also climbed to record levels. This does not automatically mean a crash is coming. But it does mean that if sentiment towards technology or semiconductor earnings changes sharply, leverage can amplify the correction just as it did in Korea.

Though a South Korean retail flow does not account for KOSPI-like correction, Jain says “a real correction in AI-heavy names is a genuine risk worth taking seriously, which could impact the overall US Markets.”

Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla – dubbed as the Magnificent Seven make up about 35% of the index, matching the dot-com-era concentration. The risk of such a high concentration was seen earlier, with the group losing $2.2 trillion in June and nearly $800 billion in a single day in July amid doubts about AI spending.

Jain further notes that South Korea's collapse was also exacerbated by heavy retail margin debt, a dynamic that's far less prevalent in the US, where AI exposure is mostly held by institutions and index funds. “That way, the more realistic outcome is a sharp, painful correction concentrated in AI-heavy names, something that has arguably already started, rather than a systemic, market-wide crash.”

Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. <br> She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. <br> As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. She focuses on explaining how money flows within frameworks like Distributed Ledger Technology (DLT), DeFi protocols, and crypto markets—while also exploring what the future of money could look like in a trustless, programmable financial world. <br> She also focuses on immigration-related issues, simplifying complex topics around visas, passports, overseas financial planning, and the many practical challenges Indians face while moving or living abroad. <br> Alongside personal finance, Sanchari has a strong understanding of international politics, contemporary and historical conflicts, and global state decisions. She closely tracks how geopolitical developments influence economies, markets, and individual financial choices, bringing together finance and global affairs in her reporting. <br> She began her career as a desk editor, which gave her a strong foundation in news writing. Over time, her interest naturally shifted toward personal finance. Before joining Mint in 2020, she worked DNA, The Times of India, Outlook Money, BloombergQuint, and ETMoney. At Mint, she got an opportunity to expand her coverage to include immigration and geopolitical developments while continuing to closely follow personal finance trends and market movements.As a journalist, she is committed to accuracy, intellectual rigour, and fairness. <br> She is an English Major and her work took her across cities including Delhi, Mumbai, and Pune. Living independently from an early age gave her firsthand experience in managing life and money on her own. This practical exposure sparked her strong interest in personal finance. <br> Outside the newsroom, Sanchari is a sports enthusiast who regularly plays lawn tennis and squash. In her younger years, she was also a national-level badminton player.

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