[Digital Today reporter Oh Sang-yup (오상엽)] As the KOSPI continues to fluctuate around the 7,000 level, retail investors are selling domestic index products and buying U.S. index ETFs.

According to the Korea Exchange, retail investors were net sellers of 14.63 trillion won worth of KOSPI shares from Sept. 1 to 30. Foreigners also logged net selling of 21.17 trillion won, while institutions were net buyers of 4.39 trillion won. With the KOSPI failing to find a clear direction over the past month, cumulative selling by retail investors and foreigners increased.

In domestically listed ETFs, retail trading diverged depending on the investment target. According to Koscom ETF Check's tally for the fourth week of September, retail investors were net sellers of 80.45 billion won of ETFs from Sept. 21 to 25. Overall ETF flows showed net selling, but buying interest flowed into products tracking major U.S. indexes.

The top retail net buy was TIGER U.S. S&P 500, totaling 101.2 billion won. KODEX U.S. S&P 500 posted 50.79 billion won and KODEX U.S. Nasdaq 100 45.52 billion won, ranking third and fourth, respectively. Retail net buying in the three products totaled 197.51 billion won.

By contrast, the top retail net sell was KODEX 200 at 93.85 billion won. KODEX 200 Target Weekly Covered Call saw 92.85 billion won in net selling, and KODEX Leverage had net selling of 90.21 billion won. Retail investors sold products based on domestic indexes while buying major U.S. index products.

South Korean investors who invest directly in the U.S. market also bought a range of ETFs as well as individual technology stocks. According to Korea Securities Depository's Seibro, the top U.S. stock and ETF net buy from Oct. 1 to 23 was iShares 0-3 Month U.S. Treasury Bond ETF (SGOV).

Schwab US Dividend Equity ETF (SCHD), which invests in dividend stocks, and Vanguard S&P 500 ETF (VOO), which tracks the S&P 500 index, followed.

SGOV invests in U.S. Treasuries with maturities of three months or less. SCHD holds U.S. dividend stocks, and VOO diversifies across U.S. large-cap stocks. The composition of the top net-buy products shows that demand for U.S. investment was spread not only across index products betting on share price gains but also across dividend stocks and short-term Treasuries.

On Oct. 24 to 25, SGOV and SCHD also ranked among the top net buys. Over the same period, investors also bought technology stocks such as Alphabet, Cloudflare and Intel. In the U.S. market, buying of technology stocks appeared alongside purchases of dividend and short-term Treasury products.

Domestically listed U.S. index ETFs and U.S.-listed ETFs differ in how they are traded, but share the common feature of investing in U.S. assets. Demand from retail investors to invest in major U.S. indexes through domestically listed products and demand from South Korean investors directly buying index, dividend and Treasury products in the U.S. market were confirmed at the same time.