Cross-border Stock Trading Increases
The total value of foreign stocks South Korean individuals and institutions purchased this year hit an all-time high of more than US$30 billion, increasing more than five-fold in five years. This has to do with more cross-border stock trading services than before by local securities firms and non-taxation on a trading profit of up to 2.5 million won (US$2,250).
According to the Korea Securities Depository, Korean individuals and institutions purchased foreign stocks worth US$32.107 billion from Jan. 1 to Dec. 26 this year. For reference, the previous high was US$22.714 billion, which was recorded last year, and the total value was US$3.073 billion in 2011 and US$5.222 billion in 2013.
U.S. stocks accounted for 68% of the total value, followed by Hong Kong (US$5.20887 billion), Japanese (US$1.69779 billion), Chinese (US$1.50721 billion) and European (US$107.29 million).
During the period, Amazon shares were the most frequently traded stock with a settlement of US$2.30303 billion. It was followed by China AMC CSI300 ETF in Hong Kong, Alibaba in the U.S., Tencent in Hong Kong, and Nvidia, Alphabet, iShares Fund, Netflix, Apple and Tesla Motors in the United States.
These days, more and more South Korean investors are paying attention to foreign stocks with the U.S. stock market enjoying the longest boom since the global financial crisis of 2008. In addition, South Korean securities firms are attracting the investors with promotion events, trading fee discounts and stock orders requiring no currency exchange.
Also, a trading profit of up to 2.5 million won (US$2,250) is tax-free. A transfer tax of 22% is applied to profits exceeding 2.5 million won.