South Korea's army of retail investors, often called 'mom-and-pop' traders, are facing intense criticism from the country's top financial officials. Their record-breaking purchases of US stocks this year, worth a net $31 billion, have been singled out as a key reason behind the Korean won's dramatic weakening, a claim that has left the investing community furious and feeling scapegoated.
The Blame Game and Investor Backlash
The Korean won has been the worst-performing currency in Asia this quarter, recently coming alarmingly close to a 16-year low. In response, authorities, including Bank of Korea Governor Rhee Chang Yong, have pointed fingers at the massive outflow of money from retail investors buying overseas equities. This accusation has "stunned" the nation's estimated 14 million retail investors, according to office worker and long-time US stock buyer Park Eun-hye.
Park described the community as "absolutely livid" at being held responsible for the currency's decline. She argued that small investors are simply "easy targets" and that broader economic factors like excessive liquidity likely play a far more significant role. This sentiment is echoed by financial influencer Syuka, a former trader, who stated on his popular YouTube channel that Koreans are not buying foreign stocks "just because it is cool," but as a direct result of a decade of stagnation in the local Kospi market.
Record Outflows and the Search for Returns
Data from the Korea Securities Depository reveals the sheer scale of the shift. The net $31 billion poured into US equities in 2025 is nearly triple the 2024 amount and over 12 times the level seen in 2019. This exodus has continued despite the Kospi Index's spectacular rise of more than 70% this year, fueled by corporate reform optimism and political pledges.
Analysts explain the trend as a "natural outcome" of investors chasing better returns. Priced out of Seoul's expensive real estate and disappointed by years of lackluster local market performance, retail traders have turned to high-risk avenues like cryptocurrency and leveraged overseas exchange-traded funds (ETFs). Stephen Lee, an economist at Meritz Securities, noted that when more money flows out of the country than comes in, it "can drive the won weaker or limit its strength." Official figures for October showed equity outflows of about $18 billion, largely linked to retail activity, compared to just $3 billion coming in.
Official Response and a Call for Policy Reflection
Concerned by this "trend" of young Koreans piling into foreign stocks, BOK Governor Rhee has signaled a regulatory crackdown. Authorities are now tightening rules on the leveraged buying of offshore-listed ETFs. However, not all officials are on the same page. Financial Supervisory Service Governor Lee Chan-jin expressed that he could "empathize" with the traders' desperate hunt for profitable returns.
Jung Eui-jung, head of the Korea Stockholders Alliance, urged the government to focus on targeted policy solutions instead of shifting blame. He called for officials to "self-reflect" and scrutinize their own policies to address the won's fundamental weakness. For some investors, the right incentives could bring capital back home. Park Minyeol, a public official in his 30s, said he is considering moving 10–20% of his portfolio into domestic equities, specifically citing interest in Korean robotics stocks.
Ultimately, as 27-year-old investor and YouTuber Won Jung Yeon put it, "Blaming the exchange rate rise solely on retail investors investing overseas is overinterpretation." He, like millions of others, started trading with a simple goal: "retail investors make investment decisions solely for profit." The current controversy highlights the deepening tension between a financially ambitious public and policymakers grappling with a vulnerable currency.
