Has Korea’s US stock frenzy peaked?

South Korean retail investors pulled back from US equities in December, tempering a monthslong buying spree as concerns over a potential tech bubble and a surging dollar weighed on risk appetite.

According to data from the Korea Securities Depository on Wednesday, Korean individual investors posted about $1.55 billion in net purchases of foreign stocks last month, down 72 percent from $5.52 billion in November.

The slowdown marked a second straight monthly decline, though it still extended a six-month run of net buying.

Focusing on the US alone, net investment in December totaled $1.87 billion, down from $5.93 billion in November and $6.85 billion in October. Even so, as Korean investors turned net sellers in other markets, including Japan, Europe and Hong Kong, the US remained the only major market to stay in positive territory.

Market watchers pointed to heightened volatility in global markets from mid-December, led by the tech and artificial intelligence sectors. Questions over the profitability outlook at Broadcom and Oracle spilled into broader uncertainty around AI, denting confidence and prompting profit-taking.

Retail investors also gravitated toward exchange-traded funds tracking major indexes such as the S&P 500 and Nasdaq. Net purchases of ETFs linked to the two benchmarks reached $1.12 billion, accounting for about 60 percent of total net investment in US stocks.

By contrast, investment cooled in the so-called “Magnificent Seven” — Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. Combined purchases of the group, a usual favorite among Korean investors, fell nearly 30 percent on-month to $3.66 billion in December.

Currency moves added to the headwinds. After staying above 1,400 won per dollar since early October, the local currency weakened further in December, briefly breaking past the 1,483 level with about a week left in the month.

Korean retail investors had extended a buying streak in US stocks since July, with net purchases peaking at $6.81 billion in October. As the won weakened, purchase volumes began to slow, deepening the pullback over the past two months.

Analysts saw the retreat as a temporary response, more tactical than structural.

“We see individuals moving to secure short-term high-liquidity assets amid elevated market uncertainty,” said Lee Da-young, a researcher at the Korea Center for International Finance.

“AI investment is a matter of speed, not trend,” said Huh Jae-hwan, an analyst at Eugene Investment & Securities. “While concerns over AI investment persist, it is unlikely that big tech firms will scale back their aggressive data center spending, as their survival is at stake.”