Stock Market 'Big Players' Step Aside... Individual Net Purchases Surpass 30 Trillion Won

KOSPI cumulative amount reaches 30.22 trillion won

Largest since statistics began in 1999

Exceeding 37 trillion won when combined with KOSDAQ

Past foreign investors at 32 trillion, institutions at 31 trillion, record highs

Ample buying power, likely to surpass previous records

[Asia Economy Reporter Ko Hyung-kwang] This year, individual investors’ net purchases in the KOSPI market have surpassed 30 trillion won. This is the largest annual purchase amount since statistics began. Individual investors’ funds are absorbing large-scale sales from foreign and institutional investors, supporting the stock market.

According to the Korea Exchange on the 24th, the net purchase amount by individual investors in the KOSPI market this year up to the previous day totaled 30.2203 trillion won. With individuals net buying 350.4 billion won in KOSPI the day before, the cumulative amount exceeded 30 trillion won. This is the largest purchase amount by individuals since the Korea Exchange began compiling trading trend statistics in 1999.

In contrast, foreign and institutional investors net sold 24.5917 trillion won and 8.3924 trillion won respectively during the same period. Individual investors are absorbing the large sales volume from the major players in the stock market, foreign and institutional investors, thereby supporting the market. Kim Yong-gu, a researcher at Hana Financial Investment, said, "The buying power of institutions, including pension funds that previously acted as a safety net for the index, has been inconsistent this year, but individual investors’ buying power has been steady. It appears to be a buying trend anticipating a rebound, and it certainly contributed to driving the index upward."

The explosive buying power of individuals began in March, when the stock market fluctuated greatly due to the impact of the novel coronavirus (COVID-19). In March alone, individuals net purchased 11.1869 trillion won worth of KOSPI stocks. This is an enormous amount, more than double the record monthly purchases of 4.483 trillion won in January and 4.8974 trillion won in February, which had consecutively set all-time highs this year. Subsequently, individuals net bought 3.8124 trillion won and 3.7835 trillion won in April and May respectively, and have continuously purchased stocks worth over 2 trillion won even this month.

The amount of stocks purchased by individuals this year can be understood by comparison with the past. Since the Korea Exchange began compiling statistics in 1999, individual investors have recorded net purchases in the KOSPI market only five times, including this year. These years are 2002 (864.2 billion won), 2007 (6.4458 trillion won), 2008 (2.8343 trillion won), and 2018 (7.045 trillion won). In other years, individuals sold stocks ranging from several hundred billion won to over 15 trillion won annually in the KOSPI market. The largest annual net purchase by individuals before this year was 7.045 trillion won in 2018. However, this year, in less than half a year, individuals have scooped up stocks worth more than four times that amount. Individuals have also purchased 7.2264 trillion won worth of stocks in the KOSDAQ market this year. Combining KOSPI and KOSDAQ, the net purchase amount rises to 37.4467 trillion won.

The largest annual net purchase in the stock market by all investors was by foreigners in 2009, who net bought 32.3864 trillion won in the KOSPI market. This followed a massive sell-off of 33.6034 trillion won in 2008 due to the global financial crisis, leading to a large-scale buying spree. The largest net purchase record by institutional investors was 31.7513 trillion won in 2008. Considering this year’s individual investment pattern, it is expected that the past maximum net purchase records of institutions and foreigners will soon be surpassed.

Individual investors still have ample buying power. According to the Korea Financial Investment Association, customer deposits in stock accounts, which were about 31 trillion won at the end of February, have grown to a record high of 47.2614 trillion won as of the 22nd of this month. This is a 'Money Move' phenomenon where funds that could not find investment destinations in the zero interest rate era are moving massively into the stock market. Experts predict that once deposits increase, they tend to be maintained rather than decrease sharply, and a rapid decline is unlikely.

Seo Sang-young, a researcher at Kiwoom Securities, said, "During the sharp market drop in March, individual funds flowed massively into the stock market, leading the rebound. Despite large net purchases, customer deposits have remained above 45 trillion won even in June. With abundant liquidity due to interest rate cuts, it is expected that the individual investors’ net buying trend will continue for the time being."

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