As sharp swings repeatedly hit the domestic stock market, retail investor money is moving back into U.S. equities.

On July 24, the KOSPI closed at 6,690.62, down 406.27 points, or 5.72 percent, from the previous session. The index fell as low as 6,650.41 during the session, and sell-side sidecar curbs were triggered on the KOSPI and KOSDAQ markets. Last week, sidecar curbs were triggered on at least one of the two markets in all 5 sessions.

After sell-side sidecar curbs were triggered on both markets on July 20, buy-side sidecar curbs were activated on the KOSPI on July 21 and July 22. On July 23, buy-side sidecar curbs were triggered on the KOSDAQ. On July 24, sell-side sidecar curbs returned on both markets.

Sidecar curbs were triggered 4 times on the KOSPI and 3 times on the KOSDAQ. Excluding weekends and the Constitution Day holiday, sidecar curbs effectively operated for 10 straight sessions since July 10. The KOSPI sell-side sidecar on July 24 was the 21st this year, and the cumulative total including buy-side curbs reached 41.

With volatility intensifying so far this year, retail investors' once-heated domestic investment activity is gradually cooling.

According to the Korea Financial Investment Association, margin lending balances stood at 327.492 trillion won as of July 23, down 58.836 trillion won from 386.328 trillion won recorded on June 24. It fell 15.2 percent in a month to the lowest level since April 9.

Unsettled receivables in brokerage trading, a gauge of ultra-short-term debt-funded investing, also fell to 945.4 billion won, dropping below 1 trillion won for the first time since April 23. Investor deposits, however, held at 1,042.974 trillion won, staying in the 1,000 trillion won range.

This is seen as borrowed investing in domestic stocks shrinking, with some money seeking other investment destinations, rather than funds around the stock market exiting completely.

Changes also emerged in retail flows around large-cap semiconductor shares. From June 23 to July 23, individuals net bought SK Hynix and Samsung Electronics by 219.89 trillion won and 113.86 trillion won, respectively.

But from July 20 to July 23, they net sold the two stocks by a combined 24.71 trillion won, including 11.56 trillion won of SK Hynix and 13.15 trillion won of Samsung Electronics.

By contrast, purchases of U.S. stocks are rising quickly. According to the Korea Securities Depository's Seibro securities information portal, domestic investors' net buying of U.S. stocks totalled $2.878 billion, or about 4.2605 trillion won, from July 1 to July 21.

That was about 4.5 times the $632.96 million in net buying recorded in June. Over just 2 days, July 20 to July 21, an additional $931.08 million was net bought.

Funds were concentrated in semiconductor leveraged products rather than major U.S. indexes. From July 1 to July 21, the most net-bought U.S.-listed security by domestic investors was Direxion Daily Semiconductor Bull 3X (SOXL), with net purchases reaching $2.431 billion.

That was about 84 percent of total net buying of U.S. stocks. SOXL is designed to track three times the daily return of the New York Stock Exchange semiconductor index. Its manager also states it targets three times the daily return, not long-term cumulative returns.

From June 24 to July 23, net inflows totalled $2.408 billion into SOXL and $613.67 million into SK Hynix ADR. Another $350.81 million flowed into KORU, a U.S.-listed ETF that tracks the Korean stock market by three times.

In the most recent week, July 17 to July 23, SOXL again ranked first in net buying at $720.12 million. SK Hynix ADR and TQQQ, which tracks three times the daily return of the Nasdaq 100 index, followed with $135.77 million and $117.08 million, respectively.

A drop in the won-dollar exchange rate also reduced the burden of investing in U.S. stocks. On July 24, the won-dollar exchange rate ended daytime trading at 1,466.6 won, down 0.2 won from the previous session. As the rate fell from the 1,550 won range in early July to the mid-1,400 won level, the cost of buying dollar assets declined.

With financial authorities reviewing measures such as raising basic deposits for domestic leveraged products and strengthening investor education, a balloon effect that shifts funds into overseas 3-times leveraged ETFs is also cited as a variable.

Some also say that while the market has shifted from Korea to the United States, the investing tendency concentrated in semiconductors and leveraged products remains unchanged, making it difficult to conclude volatility risk has fallen.

A securities industry official said, "Credit balances have declined, but money is moving into overseas leveraged products, so it is hard to say the preference for risky products itself has weakened." The official added, "Only the market has changed, and the concentration in semiconductors and leveraged products continues."