"Will It Rise Someday?"... Retail Investors Buy 18 Trillion Won in Plunge Market Without Hesitation

[Asia Economy Reporter Koh Hyung-kwang] It has been revealed that individual investors have purchased stocks worth a staggering 18.4 trillion won in the domestic stock market since the beginning of this year. Despite the stock market experiencing continuous sharp declines due to the impact of the novel coronavirus infection (COVID-19), individuals have been aggressively buying stocks. This appears to be a strategy of buying at low prices and aiming to secure profits when the market rebounds. However, as the prolonged COVID-19 situation has pushed the stock market into a state of shock, concerns over losses among individuals pursuing this low-price buying strategy have increased.

According to the Korea Exchange on the 13th, individuals have net purchased stocks worth a total of 14.8789 trillion won in the KOSPI market up to the previous day this year. Following 4.483 trillion won in January, the net purchase amount in February also reached 4.8974 trillion won. Even though less than half a month has passed this month, individuals have already bought stocks worth 5.4985 trillion won, far exceeding the previous month's purchase amount.

The net purchase amount in January (4.483 trillion won) was the largest monthly purchase amount by individuals since the Korea Exchange began compiling trading trend statistics by investor type in September 2001, and the 'buying rally' has continued to surpass that amount each month. This is a completely different trend compared to foreigners and institutions, who have shown net selling dominance of 8.5409 trillion won and 7.7644 trillion won respectively this year.

Individuals have also purchased stocks worth 3.5328 trillion won in the KOSDAQ market this year. Combining KOSPI and KOSDAQ, the net purchase amount rises to 18.4117 trillion won. This is the first time individuals have bought so much in such a short period since the beginning of the year. Even on the previous day, when a sidecar mechanism was triggered to halt program trading for five minutes during sharp price fluctuations, individuals' net purchase amount in the KOSPI was as high as 538.8 billion won.

The aggressive buying by individuals is interpreted as a low-price buying strategy based on the expectation of a future rebound. However, there are considerable concerns that it is difficult to expect a short-term rebound as the COVID-19 situation is likely to prolong, with the World Health Organization (WHO) declaring a pandemic.

Seo Sang-young, a researcher at Kiwoom Securities, explained, "It is extremely unusual for individual investors to buy around 5 trillion won every month. It seems that individuals took the adjustment market caused by the impact of COVID-19 as an opportunity to buy." Kim Yong-gu, a researcher at Hana Financial Investment, diagnosed, "If the global economic slowdown due to the spread of COVID-19 intensifies, the stock market decline could be greater than now, and individuals' losses could also be significant."

Individuals focused their purchases on semiconductor stocks. The top three stocks in terms of net purchases by individuals this year were Samsung Electronics, Samsung Electronics Preferred, and SK Hynix, with purchases worth 5.2256 trillion won, 1.2609 trillion won, and 780.8 billion won respectively. About half of the total purchase amount (approximately 7.26 trillion won) was invested in semiconductors. This was followed by Korea Electric Power Corporation (450.8 billion won), SK Innovation (370.9 billion won), Shinhan Financial Group (358.9 billion won), Hyundai Motor (319.4 billion won), Kia Motors (308.9 billion won), and S-Oil (262.9 billion won). None of these stocks have risen this year.

This content was produced with the assistance of AI translation services.