Goldman: Korean Retail Investors Shift Funds Back Home After Reshoring Tax Incentives

Goldman Sachs reports that South Korean retail investors are reallocating assets toward the domestic stock market following the launch of Reshoring Investment Accounts, which provide capital gains tax cuts or exemptions for holdings in overseas stocks. The program has attracted more than 160,000 accounts carrying $706 million in combined balances, and retail flows into U.S. equities have softened since February as more funds return to Korea. In 2026 year-to-date, retail inflows into ETFs tied to Korea have outpaced those into ETFs tracking foreign equities, reversing the pattern seen in 2025. Retail investors were the largest net buyers in 2026 with $15 billion of inflows, and Goldman expects the KOSPI to likely outperform the U.S. equity market index as retail support persists.

Key Points

Reshoring Investment Accounts have surpassed 160,000 accounts with total balances of $706 million, drawing retail capital back toward domestic equities.
Retail investor inflows into Korea-focused ETFs in 2026 year-to-date exceeded inflows into ETFs tied to foreign equity, reversing 2025's pattern.
Retail investors were the largest net buyers in 2026 with $15 billion of inflows; Goldman Sachs expects the KOSPI to likely outperform the U.S. equity market index with retail flows remaining supportive.

Overview

Goldman Sachs says South Korean retail investors are moving money back into the domestic equity market after the government introduced Reshoring Investment Accounts that offer capital gains tax reductions or exemptions for overseas stock holdings. Since the program's introduction, account registrations have climbed above 160,000 and combined account balances total $706 million.

Shifts in flows and holdings

According to Goldman, retail investor flows to U.S. equities weakened starting in February as efforts to repatriate capital gained traction. Despite this softening, retail investors still hold more than $177 billion in U.S. equities.

In the 2026 year-to-date period, inflows by retail investors into exchange-traded funds benchmarked to the domestic equity market have exceeded inflows into ETFs benchmarked to foreign equity. That trend represents a reversal from 2025, when retail investors put larger sums into ETFs tracking foreign markets.

Market participation and cash balances

Retail investors emerged as the largest net buyers in 2026, contributing $15 billion of net inflows relative to domestic institutional investors and foreign investors. Goldman also notes that the number of active stock trading accounts continued to rise, and retail brokerage account deposit balances remained elevated, indicating ample liquidity available for further market participation.

Near-term outlook

Goldman Sachs expects the KOSPI is likely to outperform the U.S. equity market index, citing ongoing retail inflows as a supportive factor for the domestic equity market. The firm projects that continued participation from individual investors will provide tailwinds for Korea-focused equities while the reshoring incentives influence asset allocation decisions.

Limitations and scope

The observations and expectations cited above are based on Goldman Sachs' analysis of investor flows and account activity since the Reshoring Investment Account program was launched. The assessment does not provide forecasts beyond the details above and focuses specifically on the flow dynamics documented in the available data.

Risks

Retail flows to U.S. equities have softened since February as capital returns to Korea - continued volatility in flows could affect liquidity in both domestic and foreign equity markets.
The outlook depends on sustained retail participation and elevated brokerage deposit balances; a decline in retail engagement could reduce a key source of support for domestic equities.

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Key Points

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