In South Korea, people are going crazy again for a new popular sensation. This time, it’s not K-pop raking in the money; it’s Elon Musk.
A recent Bloomberg report revealed that retail investors in South Korea now hold a combined stake worth more than $15 billion in Musk’s company, Tesla. One family has even gone the extra mile and bet their entire life savings on Tesla’s continued success.
A couple’s bet
Park Sunghyun and her husband — both university graduates who found work in the finance sector — decided to invest all of their $230,000 of savings into shares of Tesla, pushed by a growing reliance in South Korea on the electric-car maker for investments.
They initially did not want to delve into Tesla, but the COVID-19 pandemic struck the property market hard as the central bank cut interest rates and property values plummeted.
The couple was forced to sell their home in 2019 to find a bigger one, but were unable to find one as prices soared “beyond their borrowing capacity,” Bloomberg wrote. The costs for apartments in Seoul’s metropolitan area have doubled in the last five years, while pay rose by more than 80 percent.
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In Seoul, according to Kookmin Bank, a highly-coveted single three-bedroom apartment costs 1.24 billion Korean won (US$924,235) on average.
“I thought I would live well by working at a good company after college, but the reality is that we are the poorest in our neighbourhood,” Park said. “Living as a salaried worker, there are so many limitations.”
Despite Musk’s rather controversial reputation, the couple is keen to invest their entire life savings on the man, believing in his successes and his goals for a more modern world. Park bought at an average price of $668 a share, below the closing point of $870 on Aug. 22.
“With this man, I thought we could go all-in,” Park added. “He’s doing things that nobody was thinking of before.”
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Tesla fever in South Korea
Park and her husband are not the only South Koreans willing to risk it all on Musk and Tesla. Other South Korean retail investors have placed their investments in Tesla stock. In total, South Koreans have invested in excess of US$15 billion in the company.
This surreal amount makes these South Korean retail investors some of the largest companies in the world by market value, sharing a place with the likes of Larry Ellison, Natixis, Geode Capital Management and T.Rowe Price Group.
Bloomberg News made calculations based on Korea’s central securities depository, concluding that individual Koreans possessed about 1.6 percent of Tesla’s equity as of Aug. 17. This is more than their other combined investments in Alphabet — Google’s parent company — Apple, Microsoft and Nvidia.
People who have invested so much in Tesla often call themselves “Teslams,” a fusion of the words “Tesla” and “Islam.”
Tesla appears to attract a lot of younger South Koreans between the ages of 20 and 30, who have fewer assets. They see little reason to enter the property market and suffer financial woes like their grandparents — the elderly in South Korea suffer the highest poverty rate of all of the countries in the Organization of Economic Cooperation and Development (OECD).
Forklift driver Son Gilhun told Bloomberg that he invested heavily in Tesla, amassing a total of $100,000 in stocks during the pandemic in order to afford a house.
However, Musk and Tesla still have a shaky reputation to uphold. Musk’s recent sale of about 7.92 million shares worth $6.9 billion as backup, should he be forced to buy Twitter, has the potential to undermine investors. The kerfuffle was met with disappointment on social media, but others, like the Korean investors, remain hopeful in their investments in Tesla.
“Teslams like myself are not changing our investment,” Park, who was initially angered by Musk’s recent woes, said. “We are staying firm.”
Despite Tesla shares dropping more than 25 percent since 2021, they are still at 1,900 percent over the last three years — huge leaps ahead of Samsung Electronics’ 40 percent gain.
