Korean Investors Dump Tesla for Crypto: $657M Shift
Korean Retail Investors Shift from Tesla to Crypto
Korean retail investors are significantly impacting US equity markets. In August, they withdrew a record $657 million from Tesla Inc., while simultaneously investing over $12 billion in US-listed cryptocurrency companies this year.
This represents a notable shift in investment preferences among a key foreign retail base, attracting Wall Street's attention. The trend highlights the growing allure of crypto investments compared to traditional stocks among Korean investors.
Tesla Loses Ground in Korean Portfolios
According to data, the outflow from Tesla is the largest monthly exodus since early 2023. This is a reversal for Korean investors, who previously supported Tesla's stock rallies.
Individual Korean traders hold approximately $21.9 billion in Tesla shares, making it their top foreign equity holding. However, they are now questioning the company's AI narrative and future growth potential.
The selling pressure stems from concerns about Tesla’s fundamentals and leadership. Factors include increased competition from Chinese electric vehicle (EV) manufacturers and declining sales attributed to concerns surrounding Elon Musk’s leadership and actions. Tesla's stock volatility has been further intensified by these factors.
Mirae Asset Securities researcher Park Yeon-ju noted that while Tesla previously had strong prospects in autonomous driving and robotics, increased competition has reduced expected margins and market share.
The double-leveraged Tesla ETF (TSLL) experienced its largest monthly outflow since early 2024, losing $554 million in August, further indicating disillusionment with Tesla.
Crypto Investments Surge
While reducing their Tesla holdings, Korean investors have aggressively invested in US-listed cryptocurrency companies, purchasing over $12 billion worth of shares this year.
- In August, Korean investors purchased $426 million of Bitmine Immersion Technologies Inc.
- $226 million of Circle stock
- $183 million of Coinbase shares.
Korean investors also allocated $282 million to a 2x Ethereum ETF, demonstrating their use of leveraged exposure to digital assets via equity markets. This is reshaping global capital flows.
This trend reflects broader cryptocurrency adoption in South Korea, where approximately 20% of the population invests in digital assets, exceeding global averages. Among younger demographics (20-50), ownership rates are even higher, reaching 25-27%.
Favorable Regulatory Environment
These investment flows coincide with regulatory developments that support Korean capital allocation into cryptocurrency-related assets. South Korea is developing regulations for stablecoins, security token offerings (STOs), and crypto ETFs, suggesting a move towards institutionalization.
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