Young South Korean investors ditch local stocks for US stocks, cryptocurrenci

Young South Korean investors are now ditching local stocks and turning to markets in the United States and digital assets. According to reports, the number of young investors still active in the domestic stock markets is seriously plummeting, a development that has caused mixed reactions across the stock market in the country.

According to data from the Korean Securities Depository, investors in their 20s and 30s still active in the domestic market have reduced drastically, dropping from 14.9% and 20.9% to 11% and 19.4%, respectively. In a recent interview with a 20-year-old South Korean worker, he mentioned that he has never invested in Kospi, noting that it doesn’t look profitable.

This same reaction is shared by most people, with that major reason why they are shifting their investments to United States stocks and digital assets.

According to another worker in his 30s, Heo In-sung, he noted that he is “gradually building a portfolio of US stocks.” Heo added that he is gradually shifting away from Korean companies like Samsung Electronics and Kakao.

South Korean investors shift towards US stocks and crypto

According to reports, local investments by South Korean investors in their 20s and 30s dropped, hitting an all-time low of 9.8% and 18.8%. Ownership levels also showed the same trend, with people in their 30s holding about 9.9% of the listed stock in the Korean market in 2020, but that number has dropped to 7% in 2024. For those in their 20s, it was a drop from 2.2% to 1.6% in the same duration.

Investors in their 40s are not left out, showing how concerning the trend has become. This group represents the largest demographic in the Korean investor market, and they are dropping out of the market seriously. According to latest market data, they made up about 23% in 2021 but fell to 22.1% in 2024. Those aged 50 and above have now used the opportunity to climb up, owning a big 70.9% of all domestic stocks.

While the trend also reflects that investors in South Korea are aging, it also shows that most of them do not see the usefulness of being in the country’s stock markets. According to a senior researcher at the Korea Capital Market Institute, Hwang Se-Yoon, the trend is worrying. “If the younger generation continues pulling back, trading activity could shrink, reducing market liquidity,” she said.

Digital assets booming among the youths

While South Korean investors in their 20s and 30s have been reluctant towards the domestic stock market, there has been an attraction in the crypto market. According to the Financial Services Commission, about 48.7% of investors in the crypto industry were in the age category as of last year. The commission also mentioned that their total trading volume on the top five exchanges surpassed 2.52 quadrillion won, about 79% of the 34 quadrillion won traded by investors in the Kospi.

“It’s now common knowledge in the industry that cryptocurrencies like Bitcoin are siphoning off retail investment funds from the stock market,” a brokerage inside said. According to sources, over 700,000 overseas investors own a stake in NHS Investment & Securities and 56% of them are in their 30s and 40s. In contrast, only about 13% of Kospi 200 investors were in their 30s, while 57% were 50 and older.

The volume of foreign stock transactions carried out by South Koreans nearly doubled in 2023, moving from 59.3 billion shares in 2022 to 112.4 billion shares the next year. The number saw an uptick in 2024, rising by 39% to hit 156 billion shares, according to the data shared by the Financial Supervisory Services (FSS) and nine securities firms obtained by Democratic Party Rep. Kim Hyun-Jung.

The move has continued into this year, with the first quarter seeing South Korean investors transact $10.9 billion, despite the drop in the US stock market. The trend has now adopted the term “eoljookmi”, which means an unconditional attitude that shows a willingness to invest in the US market no matter the condition. However, young people are concerned about maximizing their income, which has driven them to US stock markets and digital assets, with the South Korean market in some sort of stagnation since the COVID-19 pandemic.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now