[E-Daily Reporter Kim Hyung-il ] Despite a decline in the won-dollar exchange rate and a rise in the KOSPI, domestic retail investors are selling off domestic and international semiconductor stocks one after another. Retail investors, who had been aggressively buying semiconductor stocks in both the U.S. and domestic stock markets, appear to be prioritizing profit-taking and risk management this month.

According to SaveRo, the securities information portal of the Korea Securities Depository, domestic investors bought $6.40589 billion worth of U.S. stocks and sold $6.5369 billion worth between the 1st and 11th of this month. This represents a net sell of $131.01 million (approximately 176 billion won). Compared to the net purchases of $207.33 million (approximately 278.6 billion won) recorded from August 1 to 11, buying momentum has weakened.

Net selling of U.S. stocks was concentrated between July 7 and 11. During this period, investors net sold $666.61 million (approximately 895.8 billion won), reversing the net buying trend of $535.60 million (approximately 719.7 billion won) observed from July 1 to 4.

Selling pressure was particularly pronounced in semiconductor-related leveraged products. From the 1st to the 11th of this month, domestic investors net sold $677.44 million (approximately 910.3 billion won) worth of “SOXL,” which tracks three times the return of the Philadelphia Semiconductor Index. From the 7th to the 11th, they sold off $1.10839 billion (approximately 1.4895 trillion won) worth of SOXL alone.

In contrast, they made net purchases of $129.81 million worth of “SGOV,” which invests in U.S. short-term Treasury bonds with maturities of three months or less. They also purchased $73.25 million and $93.85 million worth of Alphabet and IonQ, respectively, while Broadcom and Meta ranked among the top net buyers. This is interpreted as a move to reduce exposure to highly volatile leveraged products rather than avoiding risky assets across the board, and to engage in selective investing.

A similar trend emerged in the domestic stock market. According to the Korea Exchange, retail investors made net sales of 5.212 trillion won in SamsungElectronics(005930)and 7.818 trillion won in SK hynix(000660)from the start of the month through the 11th. This marks the first time in five months—since last May—that retail investors have made net sales of these two stocks.

Retail investors made net purchases of SamsungElectronics and SK hynix for four consecutive months from May through August. The volume of net purchases of SamsungElectronics rose from 9.605 trillion won in May to 17.119 trillion won in June but then declined to 5.047 trillion won in July and 2.038 trillion won in August. SK hynix also saw its net buying volume decline from the 15 trillion won range in May and June to 9.01 trillion won in July and 1.074 trillion won in August.

Although expectations for expanded investment in artificial intelligence (AI) and an improvement in the memory market continue, buying momentum among individual investors has actually weakened. With the KOSPI’s upward momentum slowing in the third quarter, analysts attribute this to increased profit-taking demand, as semiconductor stocks had risen significantly in the preceding period. In the U.S., rising interest rates and geopolitical uncertainty are believed to have spurred the sale of leveraged products.

Foreign investors have also continued their net selling trend for the fifth consecutive month this month, with net sales of 1.96 trillion won in SamsungElectronics and SK hynix, respectively. In contrast, other institutional investors made net purchases of 4.658 trillion won and 9.89 trillion won in SamsungElectronics and SK hynix, respectively. This explains why SK hynix has shown relatively strong stock performance despite selling pressure from retail investors and foreign investors. As of the 11th of this month, SamsungElectronics’ stock price had fallen 0.19%, while SK hynix’s had risen 8.24%.

Experts view the selling by retail investors not as a sign that expectations for the semiconductor industry have waned, but rather as a shift in investment strategy from aggressive buying to risk management. Seo Seung-yeon, an analyst at DB Securities, stated, “Considering the AI investment competition among Big Tech companies and the tight supply-demand balance for DRAM, the DRAM boom is expected to continue into next year,” and maintained an “Overweight” rating on the semiconductor sector.

However, if the won continues to strengthen, it could weigh on the earnings of semiconductor companies with high export exposure. There is also speculation that, as the semiconductor sector’s dominance wanes, buying interest may spread to sectors that have been overlooked until now. Shin Hyun-yong, an analyst at Yuanta Securities Korea, predicted, “The semiconductor sector’s dominance in the stock market is gradually weakening,” adding, “We are likely to enter a phase where investor attention shifts to sectors and stocks that have been overshadowed by leading stocks.”