Korean retail investors shifted $4.624 billion into US stocks in July, marking the highest monthly net purchase of the year, as US stock markets rallied for four consecutive trading days from July 30 to August 4. The surge was driven by strong earnings from Microsoft's cloud division and AI-related companies, alongside easing Middle East geopolitical tensions that pushed oil prices lower. This investment shift reversed the net selling trend seen in April and May, with investors turning back to US stocks in June and accelerating purchases in July amid a rebound in technology and AI sectors.
Korean Investors Record $4.6 Billion US Stock Purchases in July
According to Korea Securities Depository's Seibro data, Korean investors' net purchases of US stocks reached $4.624 billion in July, the highest figure recorded this year. The investment pattern shifted from net selling in April and May to net buying starting in June, with July marking a significant acceleration in US stock purchases.
During the four-day rally from July 30 to August 4 (local time), the Nasdaq Composite rose 8.77%, the S&P 500 gained 5.75%, and the Dow Jones Industrial Average climbed 4.83%. The technology-heavy Nasdaq led the gains, driven by strong performance in AI-related stocks.
US Stock Markets Rally Four Consecutive Days on Tech Earnings and Oil Price Drop
The rally began on July 30 ahead of the Federal Open Market Committee (FOMC) meeting. The Federal Reserve maintained its benchmark interest rate and confirmed a neutral stance, while anticipation built around second-quarter earnings announcements from major technology companies including Microsoft.
On July 31, Microsoft's cloud division reported strong results, alleviating concerns about AI investment profitability and triggering a surge in technology stock purchases. The decline in international oil prices, driven by easing Middle East geopolitical tensions, further supported the market rally.
In August, the momentum continued as Palantir and other AI software companies, along with industrial giant Caterpillar, reported earnings surprises. The earnings momentum spread across AI semiconductors and data center infrastructure sectors, broadening the market advance.
Positive news regarding US-Iran negotiations on reopening the Strait of Hormuz pushed WTI crude oil prices below $80 per barrel. The stabilization in oil prices led to declining US Treasury yields and reduced inflation concerns, significantly improving investor sentiment and extending the rally to four consecutive days across all three major indices.
Analysts Caution Rally May Be Technical Rebound Rather Than Trend Reversal
Kim Kyung-tae, a researcher at Sangsangin Securities, analyzed that the current rebound is more characteristic of a "correction from oversold conditions" centered on technology and AI-related stocks that had declined sharply in the previous month, rather than a full-scale uptrend driven by improved corporate earnings.
Kim stated that confirmation of semiconductor profit momentum and investor position recovery is needed to determine whether this represents a genuine trend reversal. He noted, "It is necessary to observe whether the semiconductor sector's 1-month return rate turns positive from -3.54%, and whether earnings estimate revisions continue upward. We also need to monitor whether Nasdaq 100 leverage fund positions recover in the US Commodity Futures Trading Commission data on August 8."
FAQ
How much did Korean investors invest in US stocks in July?
Korean investors made net purchases of $4.624 billion in US stocks in July, according to Korea Securities Depository's Seibro data. This marked the highest monthly net purchase figure recorded in the year.
Why did US stock markets rally for four consecutive days from July 30 to August 4?
The rally was driven by Microsoft's strong cloud division earnings announced on July 31, which alleviated concerns about AI investment profitability. Additional factors included the Federal Reserve maintaining its neutral stance, earnings surprises from companies like Palantir and Caterpillar, and WTI crude oil prices falling below $80 per barrel due to easing Middle East geopolitical tensions.
What do analysts say about the sustainability of this US stock market rally?
Kim Kyung-tae from Sangsangin Securities characterized the rally as a technical rebound from oversold conditions rather than a fundamental trend reversal. He stated that confirmation is needed through semiconductor sector returns turning positive from -3.54%, continued upward earnings estimate revisions, and recovery in Nasdaq 100 leverage fund positions in the August 8 CFTC data.
