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Overseas investors flock back to U.S.-listed Korean ETFs

Published: 16 Jun. 2025, 15:33

President Lee Jae-myung listens to a briefing on stock market trends and the market surveillance system during a visit to the Korea Exchange in Yeongdeungpo District, western Seoul, on June 11. [YONHAP]

Overseas investors are pouring back into Korean equities, buoyed by the new administration’s stock market-friendly stance and reform pledges — sending a surge of capital into U.S.-listed exchange-traded funds (ETFs) tracking the Korean market.

A net of $772.85 million flowed into the iShares MSCI Korea ETF, which is listed on the New York Stock Exchange, between June 1 and 10, according to Bloomberg and other outlets on Sunday, marking a sharp reversal from months of outflows and signaling revived confidence in Korean assets.

The ETF, which trades on the New York Stock Exchange, is a key vehicle for foreign investors who want exposure to large-cap Korean stocks such as Samsung Electronics, SK hynix, KB Financial Group and Hanwha Aerospace, but face barriers to direct investment in Korea.

The fund experienced outflows from last August to this April, but shifted to net inflows of $274.46 million in May. The buying trend has strengthened further in June. If this pace continues, the monthly net inflow could reach its highest level in a year and a half since January 2023, when it hit nearly $1.3 billion.

The ETF’s share price rose 9.55 percent over roughly two weeks from May 30 to Friday. That compares favorably to other regional ETFs such as the iShares MSCI Emerging Markets ETF, which rose 3.49 percent, and the iShares MSCI Taiwan ETF, which rose 6.62 percent during the same period.

Industry analysts expect that continued foreign inflows into the iShares MSCI Korea ETF will boost the prices of large-cap stocks and the Kospi index, enhancing the attractiveness of Korea’s stock market.

President Lee Jae-myung meets employees of the Korea Exchange at its office in Yeouido, western Seoul, on June 11. [PRESIDENT LEE JAE-MYUNG'S INSTAGRAM]

In fact, foreign investors have net purchased nearly 4.46 trillion won ($3.27 billion) over eight consecutive trading sessions on the main Kospi market so far this month.

Even on Friday, when a missile strike by Israel on Iran dented global investor sentiment, foreigners still recorded a net purchase of 121 billion won in Korean stocks.

“Foreign investors are now viewing the Kospi more positively, so we expect the upward trend in Korea’s stock market to continue in the mid-to-long term. However, a short-term breather may also occur,” said Lee Kyung-min, a researcher at Daishin Securities.

“Since the push for amendments to the Commercial Act raised hopes of resolving the ‘Korea discount,’ how proactive the ruling party’s new floor leadership is will be key in shaping foreign trading behavior.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KO SUK-HYUN [[email protected]]