Young South Koreans are ditching the local stock market in droves, opting instead for US stocks and cryptocurrencies. This shift is raising concerns about the health of the Korean market.
Fewer Young Investors
The number of young investors in the Korean stock market is plummeting. Last year, only 9.8% of investors were in their 20s, down from 14.9% in 2021. The decline is even more dramatic for those in their 30s, dropping from 20.7% to 18.8%. This trend leaves older investors (50+) holding a whopping 71% of domestic stocks. Stock ownership among young adults has also significantly decreased.
A Struggling Market
The Korean stock market is showing signs of weakness, partly due to this exodus of younger investors. Daily trading volume dropped significantly from early 2024 to the end of the year. Experts warn that a market losing its younger investors isn’t healthy.
The Rise of Alternative Investments
Meanwhile, young Koreans are flocking to alternative investments. Almost half of all cryptocurrency investors in Korea are in their 20s and 30s, and their trading volume is huge. Investment in US stocks has also exploded, with Koreans making record purchases in the first quarter of this year.
Why the Shift? Performance Matters
The main reason for this shift? Performance. While the Korean market struggled, US markets, especially the Nasdaq, soared. Many Korean investors made money in US stocks, while far fewer profited from domestic investments. Cryptocurrencies performed even better, with Bitcoin reaching record highs. Additionally, the Korean market suffers from structural issues, including a low dividend payout ratio.
A Temporary Trend?
Some believe this shift is temporary. If the Korean market recovers, young investors might return. Others argue that fundamental changes are needed to address the structural problems within the Korean market.
