AFTER plowing into local stocks at a record pace in the hunt for fast returns, South Korean retail investors have now become one of the largest holders in Tesla Inc.

The total amount of South Korean individual investor holdings in the U.S. electric-car maker’s stock reached US$3.6 billion as of Aug. 28, according to data compiled by Korea Securities Depository. That’s equal to a stake of 0.89 percent, which would rank the group at No. 5 on Tesla’s list of largest shareholders.

Tesla has been one of the largest beneficiaries of the boom in retail investing amid this year’s pandemic lockdowns. In addition to the global brand appeal of Elon Musk’s company, the electric vehicle investing theme has particular local interest in South Korea, which is home to major battery makers including LG Chem Ltd.

Record-low interest rates at home are spurring South Korean individual retail investors to seek alpha not only in the nation’s stock market but also overseas equities, said You Seung-Min, chief strategist at Samsung Securities Co.

Total deposits at local brokerages for retail stock trading have climbed to a record of more than US$40 billion this year, according to the Korea Financial Investment Association.

Seven out of the top 10 overseas stocks favored by South Korean retail investors are U.S. stocks, with Apple Inc., Amazon.com Inc. and Microsoft Corp. the most held after Tesla.

The growing global presence of traders with limited experience and short investment horizons raises concern over the impact on securities’ prices. (SD-Agencies)