Market Fluctuations Again... Stronger "Buying Opportunity" in Donghak Ant Movement

Concerns Over COVID Resurgence and North Korea Issues
Global Stocks Followed by KOSPI Weakness... Experts Suggest a Breather for Now
Learning Effect, Individuals Net Buy for 3 Consecutive Days... Market Waiting Funds Increase by 2 Trillion in One Day

[Asia Economy Reporters Song Hwajeong and Geum Boryeong] The KOSPI, which had recently been strong amid concerns over a second wave of the novel coronavirus infection (COVID-19), is now showing signs of volatility. After falling more than 4% the previous day to drop to the 2030 level, the KOSPI rebounded the next day, recovering to the 2090 level, indicating increased volatility. If concerns over a second wave of COVID-19 intensify, a market correction is expected to be inevitable, drawing attention to the future direction of the stock market.

As of 9:15 a.m. on the 16th, the KOSPI stood at 2091.05, up 2.97% (60.23 points) from the previous day. The KOSDAQ rose 3.77% (26.10 points) to 719.25. The previous day, the KOSPI plunged 4.76%, falling to the 2030 level, while the KOSDAQ dropped more than 7%, falling below the 700 level. The next day, both indices rebounded, with the KOSPI recovering to the 2090 level and the KOSDAQ to the 700 level.

The previous day’s decline was driven by concerns over a second wave of COVID-19 and North Korea-related issues. As confirmed COVID-19 cases increased recently in the U.S., China, and other countries, fears of a second wave grew, causing global stock markets to weaken. This led to the KOSPI falling for three consecutive days. Additionally, geopolitical risks emerged, contributing to the sharp drop the previous day. Amid North Korea’s warning of military action, Moon Jeong-in, the President’s Special Advisor on Unification, Foreign Affairs, and National Security, who attended the 20th anniversary event of the June 15 Joint Declaration hosted by the Democratic Party, stated, “North Korea may take military action, so a strong defense posture must be maintained,” highlighting geopolitical risks.

Experts say there is no need for excessive concern. Ha Inhwan, a researcher at Meritz Securities, said, “Given the sharp drop the previous day, it is necessary to avoid excessive fear,” adding, “The situation is expected to be better than feared.” Ha also noted, “North Korea-related issues have typically been short-term negative factors, and even if COVID-19 resurges, the quarantine system established in the first half of the year is expected to slow the speed and scope of the spread compared to February and March.”

For the time being, the market is expected to undergo a breathing spell. Lee Euntaek, a researcher at KB Securities, said, “A short-term cooling-off process may occur for now,” but added, “However, with economic expansion and the U.S. Federal Reserve’s easing policies in effect, and with liquidity waiting on the sidelines, the possibility of re-entering a bear market with a decline of more than 20% is low.”

Individual investors, known as the so-called “Donghak Ants,” continue their buying spree. Although individuals realized profits by net selling 169.2 billion KRW on the 10th when the KOSPI soared to 2195.69, they showed net buying for three consecutive trading days from the 11th to the 15th as the KOSPI turned downward. On the 11th, they net bought 1.2717 trillion KRW, on the 12th 555.8 billion KRW, and on the 15th 1.2372 trillion KRW.

The perception of a “buying opportunity returning” has strengthened. Yoon (37), an office worker, said, “In March, when the stock market crashed due to COVID-19, I was too scared to do anything fearing it might fall further, but as the market rose, those who invested then made profits,” adding, “Seeing that, I felt I had to buy during the downturn, so I bought several stocks on the 15th.” Another office worker, Oh (32), said, “I moved funds from my bank account to my stock account to ‘pick up’ stocks over three days.” Investor deposit funds, a measure of liquidity waiting on the sidelines, increased by about 2 trillion KRW in one day from 45.8461 trillion KRW on the 11th to 47.7691 trillion KRW on the 12th.

As investment sentiment flows into the stock market, margin trading is also increasing. According to the Korea Financial Investment Association, as of the 12th, the balance of credit transactions in both the KOSPI and KOSDAQ markets totaled 11.8628 trillion KRW. Compared to the low of 6.4075 trillion KRW on March 25, this represents an increase of more than 5 trillion KRW in less than three months. Between the 11th and 15th, the stocks most heavily bought by individuals were Samsung Electronics and SK Hynix, the top two by market capitalization on the KOSPI, with net purchases of 853.773 billion KRW and 246.7 billion KRW, respectively.

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