As South Korea's domestic stock market declines, Korean retail investors are ramping up their purchases of US equities, with net buying approaching 3 trillion won in just five trading sessions, surpassing the entire month of August.

Data from the Korea Securities Depository's SEIBro platform released on the 7th showed that between the 2nd and 6th, Korean retail investors net purchased US$2.19753 billion worth of US stocks, equivalent to approximately 2.982 trillion won.

That figure exceeds August's full-month net buying of US$1.96234 billion and is more than double September's US$1.00128 billion, representing roughly 40% of last month's total of US$5.42312 billion.

In other words, the volume of US stocks investors bought within five trading sessions came close to what they typically purchase in an entire month.

In April and May, Korean retail investors were net sellers of US stocks, offloading US$468.93 million and US$939.77 million respectively, partly because the Korean government introduced policies to steer capital back into the domestic market.

Starting in June, retail investors shifted to net buying and have continued to increase their positions. Last month set the highest net buying level in 11 months.

During the same five trading sessions, retail investors net purchased 4.2 trillion won worth of stocks on the KOSPI main board, significantly narrowing the gap between domestic and US stock purchases to nearly parity.

This shift in capital flows stems from the Korean stock market's failure to sustain its first-half rally and its recent sharp correction, while the won-dollar exchange rate has fallen from the 1,500 won range to the mid-1,300 won level.

A stronger won lowers the currency conversion cost for purchasing dollar-denominated assets.

Among US stocks, buying was highly concentrated in the Direxion Daily Semiconductor Bull 3X ETF (SOXL), which tracks three times the daily return of a semiconductor index.

Between the 2nd and 6th, the ETF saw US$1.62525 billion in net buying, accounting for more than 70% of total US stock net purchases.

Retail investors also net purchased US$497.05 million worth of Google parent company Alphabet shares and US$220.22 million worth of the ProShares UltraPro QQQ (TQQQ), which tracks three times the return of the Nasdaq 100 index.

The continued inflow of capital into US stocks has also squeezed domestic investment reserves. According to data from the Korea Financial Investment Association, as of the 5th, brokerage investor margin balances stood at 88.5338 trillion won, remaining below 100 trillion won for nearly a month since the 13th of last month. Margin financing balances held steady at around 28 trillion won, standing at 28.7715 trillion won.