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Local investors have sharply increased their investment in U.S. blue chips this year, as record rallies in U.S. equity markets overshadowed the bearish stock market here, data showed Wednesday.
The value of U.S. equity investment made by South Korean investors amounted to US$ 1.26 billion in the first quarter, up 177 percent from $ 457 million the previous year, according to the data compiled by the Korea Securities Depository (KSD).
Most Korean investors have increased their bets on U.S. shares through mutual funds, among which the top five types of investment vehicles included exchange-traded funds (ETFs), the KSD said.
More than 40 percent, or some $ 191.8 million of the total U.S. investment by Koreans was made in an ETF created by global asset manager BlackRock that has an index basket of blue chip companies like Exxon Mobil Corp., Apple Inc. and General Electric Co., the data showed.
The yield on such ETFs came to 10.59 percent since the beginning of this year, compared with the 3.92 percent fall in the benchmark KOSPI.
Such an uptrend in investment on U.S. equities came as the local stock market has suffered a slump this year, weighed down by aggressive monetary easing by the U.S. and
Spurred by the stimuli, a fast descent of the Japanese yen sent shares of major Korean exporters tumbling as it spawned fears that Korean firms may lose market share to Japanese rivals.
"Global funds shifted to Washington and Tokyo in the first quarter since their stock markets rallied. We're seeing a so-called 'great rotation' where money is moving to equities from bonds," said Yoo Ik-sun, a Woori Investment & Securities analyst.
Besides U.S. investment, local investors rushed to Hong Kong markets, increasing bets on blue-chip Chinese firms like Haier Group and computer maker Lenovo, according to the data.