[Donghak Ants One Month] 'Let's Go!' Assault Ants Got Smarter... Now Call Them 'Smaenteu'

Ants Holding Firm... A Showdown with Foreigners
Smart Ants Reborn as 'Smant'

Absorbing Foreign Sell-Offs, Leading the Market
7 Times More Buying Compared to 2008 Financial Crisis
Long-Term Investment Focused on Large Blue-Chip Stocks

[Asia Economy Reporters Koh Hyung-kwang and Oh Ju-yeon] As the stock market fluctuated sharply due to the novel coronavirus infection (COVID-19) crisis, individual investors, so-called 'ants,' have shown a heated enthusiasm for stock investment. In the past, ants joined in panic selling when foreign investors engaged in concentrated selling, but this time, they have led the stock market by absorbing all the foreign selling volume under the banner of the 'Donghak Ant Movement.' In particular, rather than short-term trading focused on theme stocks, they are reborn as smart ants, 'Smant,' who generate profits through long-term investment centered on large blue-chip stocks or various derivatives.

According to the Korea Exchange on the 20th, the KOSPI index, which had fallen to this year's lowest closing price of 1457.64 on the 19th of last month, rebounded 31.3% over a month to reach 1914.53 on the previous trading day (the 17th). Despite the ongoing impact of COVID-19, the clear rebound in the domestic stock market is analyzed to be based on the 'Donghak Ant Movement.' While foreign investors, pressured by COVID-19 fears, showed panic selling, individuals absorbed this volume instead of institutions, playing a role in preventing the index from falling.

Foreign investors have net sold 20.2497 trillion KRW in the KOSPI market alone over a little more than three months from January 20, when the first COVID-19 case was confirmed, to the 17th of this month. In contrast, individuals bought 20.9523 trillion KRW worth during the same period. Both foreign and individual investors set records for the largest short-term net selling and net buying since the Korea Exchange began related statistics in 1999. Institutional investors, who had defended the index during past crashes, showed nearly 3 trillion KRW in net selling during the same period. As institutions failed to properly act as rescuers, ants filled this gap.

The trading patterns of individuals have also changed 180 degrees compared to past crashes. They are concentrating investments on large blue-chip stocks with high market capitalization and taking longer investment cycles than before.

During the global financial crisis from September to December 2008, the stocks most bought by individuals were Hynix (now SK Hynix, 337 billion KRW), Woori Financial (260 billion KRW), Hyundai Motor (257 billion KRW), Daewoo Shipbuilding & Marine Engineering (228 billion KRW), Daelim Industrial (207 billion KRW), Kia Motors (167 billion KRW), Hyundai Steel (163 billion KRW), and Samsung Heavy Industries (160 billion KRW). Among these eight stocks, only Hyundai Motor, Woori Financial, and Hynix were within the top 20 by market capitalization at that time, and the total purchase amount was only 1.779 trillion KRW.

However, from January 21 to the 17th of this month, over three months, individuals bought Samsung Electronics (7.47 trillion KRW), Samsung Electronics Preferred (1.54 trillion KRW), SK Hynix (960 billion KRW), Hyundai Motor (670 billion KRW), Samsung SDI (620 billion KRW), Korea Electric Power Corporation (510 billion KRW), Shinhan Financial Group (500 billion KRW), and POSCO (440 billion KRW), all of which are within the top 20 KOSPI market capitalization stocks. The purchase volume of these stocks was 12.71 trillion KRW, more than seven times that of 2008.

The holding period for stocks has also lengthened. In 2008, individual investors bought heavily at the bottom and sold immediately after the market recovered about 20%. In contrast, this year, despite the index rebounding more than 30% from the bottom, large-scale buying continues. This is evaluated as a step toward intelligence, moving away from the past pattern of chasing market trends and focusing on short-term trading that only increased losses.

Jang Hyo-seon, a researcher at Samsung Securities, said, "Looking at individual investors' buying patterns centered on blue-chip stocks, it feels like long-term investors who consistently pursue dividends and stable profits rather than short-term gains." He diagnosed, "This is clearly contrasted with the 2008 financial crisis when individuals massively sold Samsung Electronics and SK Hynix and bought mainly small and mid-cap stocks and theme stocks."

Meanwhile, some have engaged in short-term trading by appropriately using leveraged and inverse exchange-traded funds (ETFs). From the 7th to the 10th, individuals bought 333.1 billion KRW worth of KODEX 200 Futures Inverse 2X, ranking first in net buying. As the KOSPI, which had fallen to the 1400s, suddenly rose to 1800, they anticipated that the first technical rebound would be limited and invested in inverse ETFs that profit from index declines. Although some criticized this as 'contrarian' investing during a rebound market, individual investments are becoming more flexible according to market conditions. On the 17th, when the KOSPI surged 3%, individuals again bet on a decline by buying 98.1 billion KRW worth of inverse ETFs.

Lee Chang-hwan, a researcher at Hyundai Motor Securities, said, "Although individuals have net bought during past market downturns, their judgment on the market bottom was inadequate, and due to limited funds, they often failed to hold through the rebound phase." He evaluated, "However, this time, despite large-scale net buying since the beginning of the year, the size of investor deposits has reached 45 trillion KRW, indicating sufficient additional buying power for individuals. Also, the purpose of individual stock investment itself acts as one of various portfolios, making it different from before."

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