Gaemi 🐜

For decades, property was the path to wealth creation for Korean households. But after rapid urbanisation pushed up the value of homes, younger Koreans began to look elsewhere for financial security. Armed with cheap trading apps, a generation of Koreans turned to shares instead.

South Korea has a nickname for its army of retail investors: the Ants (Gaemi). Individually, their holdings may be small. Collectively, they can move markets. Those investing overseas are known as the Seohak Ants, or Western-learning Ants, who take their name from seohak, an old Korean term for the study and adoption of Western ideas.  

Ants together strong

Korean residents invested a record $114.4bn in overseas equities during 2025, nearly three times the $42.2bn in 2024 and well above the previous record set during the pandemic-era boom of 2021. By the end of September, US shares accounted for 94% of Korean investors’ overseas equity holdings. These holdings reached $163.6bn by the end of 2025, up from $112.1bn a year earlier.

Tesla (TSLA) remained the largest foreign shareholding, worth about $21.9bn. Korean retail investors’ holdings in overseas ETFs reached a record $15.85bn in October 2025, surpassing the previous high of $12.49bn set in November 2024.

Ants vote with their feet

For decades, the Korean equity market suffered from the Korea Discount. Despite hosting world-class industrial behemoths such as Samsung (SMSN), Hyundai, and SK Hynix (SKHY), Korean firms traded at lower price-to-book and price-to-earnings multiples than international peers.

Dominant conglomerates, known as chaebol, have historically been controlled by founding families. Preserving intergenerational control often took priority over minority shareholders. Dividends were low and buybacks were rare while outside investors had limited influence. But newfangled trading apps offered access to the world’s fastest-growing firms. Korea had succeeded in creating an army of investors but failed to provide a domestic market worth investing in.

Ants on margin

To finance the splurge, Korean retail investors have borrowed through margin accounts, unsecured loans, and credit lines, a practice known locally as bit-tu, or investing through debt. Retail margin debt reached a record 38tn won ($26bn) in June 2026. Rather than sticking to vanilla tech exposure, many Ants also piled into leveraged ETFs designed to deliver two or three times the daily movement of an index or individual share.

Korean investors must complete mandatory online training before they can trade leveraged or inverse ETFs, while buyers of the new single-stock products face an additional hour of instruction. More than 530,000 Koreans completed the training in the first four months of 2026, more than twice the number in the whole of 2025.

Ant trap

In May 2026, South Korea launched domestic single-stock leveraged products, tied to Samsung Electronics and SK Hynix, which offered twice the daily movement of the underlying shares. They were designed to compete with the leveraged investments Koreans had been buying overseas.

The products arrived near the top of a semiconductor rally. When the trade flipped, the products magnified losses and added to forced selling. Citi (C) estimated Korean retail investors suffered 56.3tn won ($38.7bn) of losses on leveraged ETF investments during the correction. Regulators rushed to halt new listings and tripled the minimum deposit required to trade them. The finance minister later apologised over the government’s handling of the fiasco.

Ants become voters

As Korean investors sold won to buy US shares, their overseas purchases added to demand for dollars and pressure on the currency. By late 2025, the government was describing rising household investment abroad as part of a structural imbalance in the foreign exchange market.

The Ants had become a political force. South Korea banned short selling during the 2020 market crash and kept restrictions in place longer than most countries, amid complaints the practice favoured foreign and institutional investors. In 2024, politicians scrapped a planned tax on capital gains after opposition from a retail investor population that had swelled to 14mn.

With the Ants now affecting both markets and politics, Seoul could no longer ignore where their money was going. Korea’s response was twofold: make domestic companies more attractive and reward investors for bringing money home. Its 2024 Corporate Value-Up Programme pushed companies to improve capital efficiency, payouts, and treatment of minority shareholders. A temporary Reshoring Investment Account then offered up to a 100% capital gains deduction on overseas shares if proceeds were converted into won, reinvested in Korean equities, and held for at least a year.

Britain needs Ants

Britain’s problem starts with cash. The FCA found 41% of adults with at least £10,000 in investible assets held all of it in cash. Barclays estimates around 13mn adults may be holding money that could be invested, after allowing for an emergency reserve, totalling roughly £430bn.

The UK already offers a generous £20,000 ISA allowance, free from income and capital gains tax. Yet in 2022-23, £41.6bn went into Cash ISAs, compared with £28bn into Stocks and Shares ISAs. While South Korea is trying to corral an existing army of investors, Britain still needs to create one.

But Britain’s equity problem is not simply about retail investors. UK pension funds allocated more than half their assets to domestic equities around the turn of the century. Today, the figure hovers around 5%. This has hollowed out demand for UK shares. Companies such as Arm (ARM) have chosen New York, where deeper capital markets and higher valuations make it easier to raise money and attract talent.

An ISA for Ants

The ISA is neutral about where money is invested. A British saver receives the same tax break for buying an American technology ETF as for backing a UK mid-cap or AIM-listed company.

The mooted British ISA, an additional £5,000 allowance for domestic assets, is an attempt to change that. But making the full ISA allowance conditional on UK assets would add more complexity, make diversification more difficult, and risk making the wrapper less attractive. Buying global equities reduces Britons’ exposure to a single (middling power) country. Investment gains also flow back into the UK economy through greater spending, regardless of how those gains are earned, even if there’s a tax break through the ISA.

Stamping on the Ants

Purchases of most UK-listed shares attract 0.5% Stamp Duty Reserve Tax. Buyers of US stocks face no equivalent UK transaction tax. In a world where retail investors are sensitive to trading fees, that 0.5% tax is a drag on market liquidity and a penalty on UK market participation. While the tax revenue may look attractive to a chancellor scrambling to cover spending commitments, it’s hardly guaranteed. If companies and trading shifts overseas, stamp duty takings will fall off a cliff.

Scrapping the tax on UK equities, or at least on FTSE 250 and AIM growth stocks, is low hanging fruit. But, ultimately, you can’t force investors or pension managers to buy UK equities out of moral duty. Tax breaks can only go so far.

A market fit for Sparrows

South Korea has its Ants. Britain could have its Sparrows. Individually small and easily overlooked, retail investors can become a meaningful force when they move together. They’re also smarter than bureaucrats give them credit for. People should be encouraged to invest because it helps them build wealth and beat inflation. Instead we wrap consumers in bubble wrap, saving them from the big bad world of risk and reward.  

The London Discount will not disappear on its own, and Sparrows will not hold underperforming domestic assets out of love for King and country. Britain has galvanised retail participation before and could again by reducing costs, improving access, and providing attractive tax wrappers. But it cannot compel investors to love homegrown stocks without more stocks worth loving coming to the London market.