Make a quick profit and get out! Asian retail investors who bought the dip in the U.S. stock market are starting to retreat

When US President Trump announced a series of new tariffs in April, triggering market turmoil, retail investors across Asia rushed into the US stock market to buy the dip. However, there are now signs that they are withdrawing rapidly...

Official data shows that South Korean retail investors made their first net sales of US stocks in May, offloading a total of over $1 billion worth of US equities, the first such occurrence since Trump's election victory last year;

Meanwhile, Japanese retail investors also became net sellers of US exchange-traded funds (ETFs). Data from the Tokyo Stock Exchange shows that Japanese retail investors sold off approximately $166 million worth of US ETFs that month, the largest reduction since April 2023.

In addition, according to data from a local brokerage, the volume of US stocks purchased by Singaporean traders in May decreased by a quarter MoM.

Steve Sosnick, Chief Strategist at Interactive Brokers, said, "They (Asian retail investors) were very aggressive when the market was low, but now the buying momentum has weakened."

This withdrawal suggests that even some of the world's most astute and risk-tolerant individual investors are now wavering in their enthusiasm to rush to buy amid continuous price rise in US stocks as they once again approach historical highs.

When Trump's "Emancipation Day" tariffs stirred the market, Asian retail investors poured into the US stock market, buying stocks and ETFs even as Wall Street was shrouded in gloom. Their actions did indeed yield substantial returns: the S&P 500 Index had slipped 12% from April 2 to April 8, but has since rebounded over 20% from its lows.

It can be said that the US stock market has largely ignored broader external anxieties about US assets over the past few weeks, while the "sell the US" trade has weighed heavily on the US dollar in recent months and triggered sharp fluctuations in the US bond market.

The key still lies with Trump

The slowdown in demand from Asian retail investors coincides with a weakening rebound in the S&P 500 Index. Although the index is currently less than 2.5% away from its historical high of 6,147.43 points set in February, the benchmark index has gained less than 1% over the past three weeks, a rare moment of calm after months of sharp fluctuations.

Some industry insiders said,The fate of the US stock market in the coming days will largely still depend on Trump, whose unpredictable policy announcements—sometimes followed by abrupt reversals—are enough to shake the market "in a heartbeat."

A 25-year-old investor from Singapore said he had previously bought a "significant" amount of ETFs tracking growth stocks and US indices. As these investments quickly yielded returns, he later reduced his holdings.

"Now that the market has returned to its original position, I won't be putting more money into the market than usual," Goh noted. "But if Trump says or does anything that will once again weigh on the market, I'll buy more."

Of course, some Asian retail investors remain bullish on the US market. Over the past decade, the US stock market has become a safe and relatively reliable money-spinner for many Asian investors. Against the backdrop of soaring large-cap tech stocks, the US stock market has outperformed stock indices in the Asia-Pacific region.

For some Asian investors, the idea of "investing money in the US market" may be difficult to shake off for the time being.

Nam Yong Soo, head of the ETF management department at a South Korean investment management company, said that most investors in South Korea have a strong belief in US stocks.