KOSPI's Record High March, The Power of the Growing Donghak Ants

Deposit Funds Increase by 1.78 Trillion Won in Just 5 Trading Days
Experts Say "There Is Ample Room for Further Growth"

[Asia Economy Reporters Song Hwajeong, Lee Minwoo] The domestic stock market has been showing strong upward momentum day after day. The KOSPI has surpassed the 2300 mark, and the KOSDAQ has exceeded the 850 mark. Experts predict that while the domestic stock market still has room for further gains, the recent rapid rise may somewhat slow the upward momentum.

According to the Korea Exchange on the 6th, the KOSPI has not seen a single down day this month. It has continued its strong upward trend, setting new yearly highs for three consecutive days. On this day as well, it showed an upward trend, attempting to settle above the 2350 level. The KOSDAQ's upward momentum is even stronger. It has risen for nine consecutive trading days, surpassing the 850 mark during intraday trading.

The KOSPI closing above 2300 is the first time in 1 year and 10 months since October 2, 2018. Surpassing 2300 means breaking through the 2250 box range where it was trapped throughout last year. Ha Inhwan, a researcher at Meritz Securities, said, "The KOSPI could not surpass 2250 since last year. It briefly exceeded 2250 just before the COVID-19 outbreak at the beginning of this year but then plunged due to the COVID-19 shock." He added, "Breaking through 2300 means that all the variables that dragged the market down from 2018 to 2020 have been overcome or that even more positive factors are being reflected."

Unlike past market recoveries, individual investors' buying power has driven the index. The "Donghak Ant Movement" exerted influence comparable to foreigners and institutions. Individuals have continued net buying for six consecutive trading days since the 29th of last month. They absorbed the supply released by foreigners and institutions, pushing the index higher. During this period, individual net buying in the KOSPI market reached 1.7653 trillion KRW. In the same period, foreigners bought only 87 billion KRW, while institutions sold 1.8519 trillion KRW.

Investor deposit funds, which are standby funds for the stock market, are also on the rise. According to the Korea Financial Investment Association, the amount increased by 1.7862 trillion KRW over five trading days, from 47.4484 trillion KRW on the 29th of last month to 49.2346 trillion KRW on the 4th. The number of investors borrowing money to invest in stocks is also increasing. As of the 4th, the balance of margin loans (money borrowed from securities firms by investors to buy stocks) in the KOSPI market was 6.8419 trillion KRW, the highest since statistics began in 1998. It increased by 144.3 billion KRW over the recent five trading days.

Park Kihyun, head of the research center at Yuanta Securities, explained, "Considering the abundant liquidity and the strengthened regulatory stance on real estate, the increased interest of individual investors in the stock market is natural." He added, "The trading patterns of individuals are also showing signs of moving away from the speculative tendencies seen in the past, which can be viewed positively."

Although the rapid rise may slow the upward momentum, the upward trend is expected to continue. Yoon Changyong, head of the research center at Shinhan Financial Investment, said, "Corporate earnings are rebounding from the bottom in the second to third quarters, and the continued decline in real interest rates makes it reasonable to keep valuations positively open." He added, "As the U.S. presidential election scheduled for November is expected to gradually influence the stock market, attention should be paid to overall policy and market impacts as well as changes in beneficiary sectors in the event of a regime change."

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