Brokerages race to capture foreign retail investors as they emerge as a force in Korean equities

Capital moves in and out of Korea, driven by a range of economic and geopoltiical forces. In our "Money Mover" series, we explore key market developments that could shape investment decisions and influence the flow of global funds. — ED. 

For decades, foreign participation in Korea’s stock market has been dominated by institutional investors, in part due to limited access and relatively muted interest compared with Asian peers such as Japan.

Now, a red-hot Kospi rally and the rollout of omnibus accounts, which enable foreign investors to trade Korean stocks directly through their existing overseas brokers, are drawing overseas retail traders, a shift that could inject fresh liquidity — and volatility — into one of the world’s best-performing equity markets since last year.

Early signs of interest have already emerged. Foreign investors traded a total of 5.8 trillion won ($3.8 billion) through omnibus accounts over three weeks, from April 26 to May 15, resulting in net purchases of 2.2 trillion won, the financial authorities announced.

A few years ago, Samsung Electronics and SK hynix were niche topics on Reddit's investing communities. But in line with the growing influx of overseas investors, retail investors now flock to the forum to track daily share-price moves, ask how to gain exposure to the stocks, and debate their prospects.

Foreign investors' share of the Kospi's market capitalization has been gradually increasing. Their share jumped from the mid-30 percent range in June 2024 to the low 30 percent range in June 2025, and is near 40 percent so far this month.

From niche to the mainstream 

Up until recently, foreign retail investors largely relied on overseas exchange-traded funds (ETFs) for indirect exposure or depository receipts listed on global exchanges, due to cumbersome account-opening procedures for nonresidents. The omnibus account, however, has opened a more direct route, allowing nonresidents to access Korean equities through local brokerages. It was part of the government’s push to improve the accessibility of the Korean market to foreign investors to secure an upgrade in the Morgan Stanley Capital International (MSCI) classification from emerging to developed market status.

The account’s development has been gradual since its introduction in 2017, due to the absence of clear operational guidelines. Momentum began to build in 2023 with the abolition of the foreign investor registration system. The detailed usage guidelines were issued in 2025, before restrictions on eligible account-opening entities were lifted in January, effectively completing a phased regulatory easing process.

“The current period is a significant turning point for the market,” Steve Kim, head of foreign investment solution team at Hana Securities, told the Korea JoongAng Daily in an interview at its headquarters in western Seoul on June 1. “While in the past there was interest in the Korean market but limited ability to translate that into actual investment, we now see an environment where greater market openness is being enabled across technology, platform infrastructure and regulatory frameworks,” he added, noting global interest in Korea’s AI, semiconductors, power infrastructure, shipbuilding and defense sectors. 

Hana Securities was the first to launch the account last year through a partnership with Hong Kong-based Emperor Securities, and later, in May, with Japan’s Capital Partners, though access was limited to phone calls and email. The system is expected to gain momentum as it moves to a mobile trading system through a partnership with Futu Securities, a tech-driven Hong Kong brokerage with more than 30 million registered users, starting in late June.

Samsung Securities followed in May, with a partnership with Interactive Brokers, a U.S.-based brokerage operating business in more than 170 markets. Mirae Asset Securities launched the service with Singapore-based UOB Kay Hian in June. A series of other brokerages — including KB Securities and Meritz Securities — are also planning to launch the account in the second half of the year.

Despite the opportunity, some market participants say further reforms are needed, including allowing leveraged products to attract more meaningful foreign inflows, while preparing for potential increases in volatility as global retail investors gain greater access to the market. 

The 10,000 Kospi era in sight

The Kospi projection has been very optimistic, consistently receiving target upgrades from global investment banks.

Even after a more than 8 percent dip on June 8, Goldman Sachs told Bloomberg TV that "in the longer run, this will prove to be a technical correction," a few days after the bank raised its Kospi target to 12,000 points, describing Korea as its highest-conviction market in Asia. In May, JPMorgan also raised the index's bull target to 10,000 points, citing memory-cycle conditions.

Bullish predictions for the Kospi are helping sustain foreign investor interest in Korean equities, with some market participants betting the rally still has room to run. 

On Reddit, threads on how to buy Korean stocks have been multiplying, with users trading tips on gaining access to Samsung Electronics and SK hynix. The frenzy has also spilled into U.S. products such as the Roundhill Memory ETF, which has amassed nearly $10 billion in just 45 days since its April launch and holds about 45 percent of its portfolio in the two chip giants. 

All that enthusiasm could help bring Korean stocks to the mainstream. 

“The full-scale activation of omnibus account trading for foreign investors is a powerful driver pushing the Korean stock market into the global mainstream,” said Kang Jin-hyuk, an analyst at Shinhan Securities. “It has laid the groundwork for global retail capital inflows to broaden beyond blue chips such as Samsung Electronics and SK hynix, and into a wider range of stocks, including AI value-chain companies and undervalued holding companies.” 

While the initial interest is largely concentrated on large-cap stocks, it is likely to gradually broaden to smaller companies, providing a further boost to the market.

“Capital inflows so far have been concentrated in large-cap stocks with strong global competitiveness, including semiconductors, secondary batteries, power equipment and defense,” said Kim of Hana Securities.

“From the perspective of foreign investors, access to information and liquidity are key considerations, so it is natural that trading initially centers on large-cap names. Over time, however, as familiarity with the Korean market increases and access to research and investor relations information improves, there is room for interest to broaden into small- and mid-cap growth stocks and thematic plays. Interest in K-content, biotech and AI-related companies is expected to gradually increase,” Kim added.

The introduction of omnibus accounts could result in an estimated $23 billion in additional foreign capital inflows in the mid-term, equivalent to roughly 0.5 percent of Kospi market capitalization, according to Kwon Soon-ho, a quant analyst at Daishin Securities. The assumption is based on calculations that incorporate the share of overseas equities in U.S. household portfolios and Korea’s weighting in the MSCI All Country World Index (ACWI).

Including potential inflows from Hong Kong, the figure could rise by an additional 10 trillion to 15 trillion won, Kwon added, citing the participation of Asia-based capital and offshore funds routed through Hong Kong, as well as the size of assets under management in the city's financial market.

Kwon evaluated the market as being in “a transitional phase” in which short-term selling pressure from rebalancing and profit-taking coexists with medium-term potential for new inflows driven by improved market accessibility.  

Institutional backdrop still catching up

While omnibus accounts have created a new gateway for foreign investment, further institutional groundwork is needed for the policy to translate into meaningful capital inflows.

That includes permission to trade derivative products such as leveraged ETFs, which have gained strong momentum in Korea’s stock market since their debut on May 27. While the government is reviewing the allowance of ETFs trading through the omnibus account, access to leveraged ETFs isn’t being considered.

“Korea should also permit single-stock leveraged ETFs trading through omnibus accounts,” Kim of Hana Securities explained. “These products have gained significant traction in Hong Kong, where one of the most popular funds is linked to SK hynix. Allowing similar products in Korea would enable local providers to compete directly with the overseas offerings. Given the strong investor demand and the relatively high fees charged for the same products overseas, there is a meaningful opportunity for that demand to be captured domestically.”

Total global leveraged and inverse single-stock ETF assets had exceeded $60 billion, compared to under $$30 billion at the start of April, according to Goldman Sachs data as of May 27. Mirae Asset and Samsung Asset Management charge management fees of 0.09 percent and 0.29 percent, respectively, for the single-stock leveraged ETFs — far lower than 1.6 percent by CSOP, the operator of the products in Hong Kong.  

Another issue concerns taxation. Under current tax rules, domestic financial institutions are required to withhold dividend taxes on income earned by foreign investors from Korean stocks. Dividend taxes on income from ETF and ETN investments made through omnibus accounts, however, remain outside that framework. Fiscal authorities are expected to address the issue in a tax-reform package due in July.

“Without clear rules governing country-specific tax rates for foreign investors, brokerages face significant administrative challenges in applying the correct tax rates, which vary based on investors' countries of residence,” Kim explained. “Until the regulatory framework is revised, only total-return ETFs, which automatically reinvest dividends rather than distribute them, can be broadly offered through omnibus accounts.”   

Some say omnibus accounts are creating a new pattern of volatility in Korea, as socially driven trading among retail investors can now flow more directly into the market through global brokerage channels.

“Historically, major expansions in retail market access — such as the proliferation of brokerage branches in the 1920s and the widespread adoption of home trading systems in the 1990s — have been accompanied by increases in speculative trading activity,” said Kang of Shinhan Securities. 

For instance, when a prominent finfluencer with more than 350,000 followers on X mentioned Auros Technology, a Kosdaq-listed maker of semiconductor inspection and precision measurement equipment, in May, the stock surged to its daily price limit as buying interest flowed through Samsung Securities, which has partnered with Interactive Brokers for its omnibus account service.

After reaching 52,000 won at its peak on May 6 — one day after hitting the daily limit up — the stock had almost halved to 29,500 won as of Wednesday.  

“The current relaxation of omnibus account regulations may similarly facilitate coordinated behavior among global retail investors,” Kang added.

BY JIN MIN-JI [[email protected]]