Ants Gone Wild... Largest Monthly Net Buying in 10 Years Despite Burning Accounts

Individual Net Purchases of 8.3863 Trillion KRW on KOSPI from 1st to 18th
Largest Scale Since 2008

[Asia Economy Reporter Oh Ju-yeon] Individual investors' investment tendencies are becoming more daring. Despite the stock market continuously plummeting due to the impact of the novel coronavirus infection (COVID-19), they have purchased stocks worth over 10 trillion won in a month, reflecting on the history of stock price rebounds during past market downturns. They liken COVID-19 to a wartime situation and call themselves the 'ant army,' supporting the index.

[Image source=Yonhap News]

According to the Korea Exchange on the 19th, an analysis of monthly net buying amounts by individuals over 147 months from January 2008 to this month shows that from the 1st to the 18th of this month, individuals net purchased a total of 8.3863 trillion won in the KOSPI market, marking the highest level. Moreover, since the trading days in March are not yet over and the net buying trend continues, this is noteworthy.

Excluding this month, the months with the highest monthly net buying amounts by individuals were February and January of this year. In February, the monthly net buying amount was 4.8973 trillion won, ranking second, and in January, it was 4.483 trillion won, ranking third. Since the beginning of this year, individual net buying has reached a total of 17.7666 trillion won.

Previously, the months with high individual net buying amounts included May 2010 with 4.1823 trillion won, July 2015 with 2.8755 trillion won, May last year with 2.7999 trillion won, and October 2008 with 2.4625 trillion won.

On this day as well, individuals have continued net buying for 11 consecutive trading days. As of 10:20 AM, individuals net purchased 11.2 billion won worth of stocks in the KOSPI market. Foreigners sold 190.6 billion won, and institutions bought 164.1 billion won worth.

Despite the KOSPI plunging to levels seen 10 years ago, the continuous buying by individuals is because they recall the past 'stock market rebound after a decline' and perceive the COVID-19-induced downturn as an opportunity for bargain buying.

In particular, there was an explosive reaction to Samsung Electronics. Based on expectations of an index rebound, funds flowed into large-cap blue-chip stocks considered more stable investments compared to other stocks. From the 24th of last month to the day before, individuals purchased 5.026 trillion won worth of Samsung Electronics shares. During this period, Samsung Electronics' stock price fell 19.72% from 56,800 won to 45,600 won.

While individuals are jumping into the stock market expecting a rebound, it is uncertain how long they can endure the downturn. The COVID-19 situation is not just ending but is now raising concerns about an economic downturn. The securities industry agrees that although the index decline has been rapid and a short-term bottom is near, more time is needed to confirm this.

Lee Kyung-min, a researcher at Daishin Securities, said, "While technical rebounds driven by counterbuying inflows and policy expectations are valid, poor economic indicators, weak corporate earnings, and downward revisions of forecasts by major institutions and financial organizations can trigger anxiety and fear in the KOSPI and global stock markets at any time," adding, "The process of confirming the bottom may be somewhat rough."

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