South Korean investors are withdrawing from the Chinese and Japanese stock markets. The Chinese stock market, which was showing signs of recovery at the beginning of the year, has been on a downward trend since last month.
With the Yen falling to its lowest level, the uncertainty of the Japanese economy has increased, leading to a reduction in investment. The funds of individual investors who have withdrawn from China and Japan are heading towards the U.S. stock market.
Chinese Stock Holdings Hit Lowest This Year
According to the Korea Securities Depository’s SEIBro on July 3, the amount of Chinese stocks held by South Korean investors last month was $874 million, recording the lowest monthly figure this year. Compared to May ($941 million), it fell by 4.37%.
Earlier this year, the amount of Chinese stocks held by small investors and big traders was showing an increasing trend due to expectations of economic recovery. The amount of holdings, which was $883 million in January, increased to $983 million in March. The amount of holdings, which maintained the $900 million line until May, fell by $900 million last month. The amount of Hong Kong stocks also plummeted. The amount of Hong Kong stocks in June was $1.61 billion, down 6.42% from the previous month ($1.711 billion).
The Chinese stock market, which was showing signs of recovery, turned to a downward trend since mid-May. According to an analysis, small investors and big traders began to pack their bags. The Shenzhen Composite Index fell 4.08% from 1793.98 to 1720.74 in about 40 days from May 20 to July 2. During the same period, the Shanghai Composite Index also fell from 3171.15 to 2997.01, breaking the 3000 line.
China’s May economic indicators, which did not meet market expectations, tripped it up. China’s industrial production in May increased by 5.6% from the same period last year, falling below the market forecast (6.0%). The slowdown in the growth rate of manufacturing profits in May also worked negatively.
Seung Yeon Ju, an analyst at ShinYoung Securities, explained, “Looking at the economic indicators in May, production and fixed asset investment were sluggish. Retail sales, which had exceeded market expectations, were also sluggish when looking at sectors such as automobiles that had implemented stimulus policies.” She added, “The growth rate of manufacturing profits in May slowed down, and the real estate transaction volume was also sluggish, causing the index to struggle.”
South Korean investors also pulled out of the Japanese stock market. The value of the yen has fallen to its lowest level in 37 years, leading to large foreign exchange losses and increased economic uncertainty, which has reduced the investment appeal.
Last month, the amount of Japanese stocks held by South Korean investors was $4.048 billion. This is down 1.9% from May ($4.123 billion). In particular, the Japanese small investors and big traders sold a net $30.89 million worth of Japanese stocks last month, showing a selling dominance for the first time in about 15 months since March last year.
U.S. Stock Holdings Are The Highest This Year
South Korean investors who have escaped from China and Japan are heading to America. Last month, the amount of U.S. stocks held by South Korean investors was $87.08 billion, recording the highest monthly figure this year. Compared to the beginning of the year ($64.693 billion), it increased by 34.60%.
As the U.S. stock market continues to break records, investors are also said to be making aggressive investments. The steady faith buying centered on Nvidia, the favorite stock of Seohak traders and investors, also had an impact. The top net purchase stock of Seohak traders and investors in the past month was Nvidia, buying $1.2209 billion worth during this period.
The securities industry expects the U.S. stock market to continue to rise in the second half of the year. However, the diagnosis is that the rise will slow down compared to the first half. If semiconductor was the leading sector within the AI value chain in the first half, it is advised to pay attention to small and medium-sized stocks and cyclical consumer goods in the second half.
Hwang Byung Jun, an analyst at Yuanta Securities, explained, “The direction of rise is valid for the U.S. stock market in the second half, but the rise is expected to slow down compared to the first half.” He added, “This is because the rising momentum of the Magnificent 7 (M7), which is the leading stock, is weakening.” He added, “As expectations for an interest rate cut are reviving, the leading sector may shift to small and mid-cap stocks or cyclical consumer goods such as machinery and power equipment in the second half of the year.”
