According to the Zhitong Finance APP, the pessimism on Wall Street is putting pressure on the most steadfast supporters of the &#34;American exceptionalism&#34; — South Korean retail investors seeking venture capital. According to custody data since 2011, as of March 20, these investors have poured $10.2 billion into U.S. stocks and exchange-traded funds (ETFs), setting a record for quarterly inflows. They favor the hardest-hit stocks, such as Tesla (TSLA.US), which has fallen 38% so far this year, and have invested billions of dollars in leveraged ETFs that amplify price fluctuations.Their confidence in the U.S. stock market is facing the most severe test in years. President Trump's aggressive stance on global trade has severely dragged down stock prices, with the Nasdaq 100 index falling 6% since the beginning of 2025. Wall Street banks are reconsidering their lofty index forecast targets, and the two-year boom of the &#34;Magnificent Seven&#34; tech stocks has turned into months of decline.<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250324/1742786898824718.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250324/1742786898824718.png"/>A white-collar worker from Seoul, Noh, even sold his house last year and invested nearly half of the proceeds in the U.S. stock market. He said that the $480,000 he used to buy Nvidia (NVDA.US) shares has now dropped about 10%, while his $69,000 investment in Tesla has lost 40%. He said, &#34;The Korean stock market was performing very poorly at that time, and I had already reduced my holdings in Korean stocks. I thought I would trade U.S. stocks soon and earn about 5% because the U.S. stock market would eventually go up.&#34;This quick trading has now become a long-term investment. Noh stated, &#34;I will hold the shares until I make a profit. If necessary, I can wait for 5 years or even 10 years.&#34;The increasing number of investors falling into this trap is causing concern among regulators and corporate executives in Seoul. The Financial Supervisory Service of Korea is considering tightening regulations on some overseas exchange-traded products (ETFs), which would quell some of the riskiest bets on the U.S. stock market. One of South Korea's largest brokerages, Mirae Asset Securities Co., has suspended trading of some overseas ETFs and halted margin loans for Tesla shares.Kim Hwa-Joong, CEO of Mirae Asset Private Wealth Management, stated that the company is worried about investors making short-term high-risk bets. However, she said that so far, its clients have not heeded its warnings. It is well known that South Korean retail investors are eager for venture capital, having previously faced troubles from betting on cryptocurrencies and foreign structured products.South Korean retail investors are even keen on leveraged trading. This year, South Korean investors have net invested $2.2 billion in Tesla shares, making it the hottest trade so far. They have also invested $1.7 billion in a leveraged ETF, seeking double the daily price fluctuations of Tesla shares. They have also flocked to buy Palantir Technologies Inc. (PLTR.US), Nvidia, and a leveraged ETF betting on U.S. semiconductor stocksAs the U.S. stock market weakens, buying pressure has become stronger. After Tesla's stock price fell 28% in February, South Koreans purchased $836 million worth of Tesla shares this month and invested $586 million in this leveraged ETF. In March of this year, Tesla's stock price fell another 15%.According to custody data, as of March 20 this year, they have invested $2.5 billion in five popular U.S. leveraged ETFs. However, even after the influx of funds, their investment value in these ETFs remains below the levels seen at the end of 2024—indicating a sharp decline in valuations.The attraction of the U.S. stock market for South Korean investors is partly due to its accessibility. Competition among brokerages has broken down barriers to foreign investment, while South Korean investors looking to take risks in the domestic market face stricter regulations than those overseas. Many South Korean investors are also skeptical about the domestic market, which is dominated by large corporate groups, and the Korea Composite Stock Price Index is still far below the highs reached in 2021. Last year's brief state of emergency exacerbated pessimism.<img src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250324/1742786905439121.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20250324/1742786905439121.png"/>Ironically, the South Korean stock market is recovering while the U.S. stock market is declining. So far this year, the Korea Composite Stock Price Index has risen by about 10%, thanks to low valuations and a bright outlook for the chip industry. However, so far, regardless of the risks, the army of small investors in South Korea remains committed to the U.S. stock market.Sang Eui-min, a small investor from Seoul who wrote a book about the stock market, said that many of the latest batch of investors who started trading after the COVID-19 pandemic are complacent about the U.S. stock market's ability to rebound from each decline. He said, &#34;They don't know how scary the market can be.&#34;

TSLA

South Korean retail investors are increasing their investments in U.S. stocks amid the decline, particularly in technology stocks like Tesla, despite facing confidence challenges. Data shows that as of March 20, they have invested $10.2 billion in U.S. stocks and ETFs, setting a record for quarterly inflows. Despite the market's pessimism, investors still plan to hold long-term and are even willing to wait for years to achieve profitability. Regulators have expressed concern and are considering tightening regulations on overseas ETFs

- Wall Street's pessimism is pressuring South Korean retail investors who have heavily invested in U.S. stocks and ETFs, contributing $10.2 billion since 2011.  
- Despite significant losses in stocks like Tesla and a decline in the Nasdaq 100 index, these investors remain committed, with some even suspending domestic investments.  
- Regulatory bodies in South Korea are considering tightening rules on overseas ETFs due to rising risks, while local markets show signs of recovery, contrasting with the U.S. downturn.

Zhitong

Tesla

U.S. stocks "loyal fans" South Korean retail investors buy more as prices fall, crazily bottom-fishing in Tesla and other tech stocks