South Korean Retail Traders ‘Livid’ Over Won Slide Blame Game

South Korean retail investors' $31 billion record purchases of US stocks this year have turned them into scapegoats for the country's weakening currency. They are furious.

Asia's worst performer this quarter, the Korean won came close to hitting a 16-year-low in recent weeks. Officials, including the Bank of Korea governor, have blamed the retail traders' appetite for overseas equities for hurting the currency.

The accusation "stunned" many of the country's estimated 14 million mom-and-pop investors, said office worker Park Eun-hye, who has been buying US stocks for years. People were "absolutely livid" that they were being held responsible for the won's slide, she added.

Small investors are "easy targets" for blame, Park said, when in fact "excessive liquidity and other broader factors could play a much bigger role."

Priced out of Seoul's red-hot real estate and fed up of lackluster returns on the Kospi — which had languished for a decade before 2025's unusual bull run — South Korea's army of retail investors have turned to high-risk options, from crypto to leveraged overseas exchange-traded funds, in a bid to create wealth. But their industriousness is now frustrating Seoul's top financial policymakers.

Korean retail investors have snapped up an unprecedented net $31 billion worth of US equities this year, according to Korea Securities Depository data. That's nearly triple the amount they bought in 2024 and more than 12 times the level in 2019.

One prominent local paper ran a headline decrying a possible "foreign exchange crisis" — which the government has roundly denied. Official data showed equities outflows totaled about $18 billion in October, the bulk of which was linked to retail investors, versus roughly $3 billion coming in.

"If more money flows out of the country than comes in, it can drive the won weaker or limit its strength," said Stephen Lee, economist at Meritz Securities, adding that Koreans' overseas equity investments were "a natural outcome" of the expected returns.

The "trend" of young South Koreans piling into overseas stocks is concerning, BOK Governor Rhee Chang Yong said late last month, and authorities are tightening rules on leveraged buying of ETFs listed offshore.

But Koreans are not buying "foreign stocks just because it is cool," ex-trader and portfolio manager turned YouTube financial influencer Syuka said on his widely-watched channel. Such purchases resulted from a decade of stagnation in the local market, he said.

The outflows have persisted even as the Kospi Index has risen more than 70% to become one of the world's best performers this year, thanks in part to optimism about corporate reforms and President Lee Jae Myung's repeated pledge to boost market value.

Targeted government efforts are key to fixing the won's weakness, said Jung Eui-jung, head of the Korea Stockholders Alliance, adding that officials should "self-reflect" and scrutinize their policies, not "shift blame" to retail investors.

Even some officials have taken a softer line on the issue, with Financial Supervisory Service Governor Lee Chan-jin saying he could "empathize" with Korean traders' desperate hunt for returns.

"Blaming the exchange rate rise solely on retail investors investing overseas is overinterpretation," said 27-year-old retail investor Won Jung Yeon who runs a financial tips YouTube channel.

He started trading stocks after realizing he'd never get rich off a salary alone and said all "retail investors make investment decisions solely for profit."

If the incentives were right, more investors like Park Minyeol, a Seoul-based public official in his 30s who has invested heavily in overseas stocks, said they could be lured home. He's "considering putting about 10–20% of my money into domestic equities," due to his interest in Korean robotics stocks.

Source: Bloomberg Europe