Domestically and Abroad... Donghak Ant Movement Season 2 Starts

Individual monthly net purchases near 6 trillion KRW... Largest since March 2020 COVID-19
Investor deposit balance also surpasses record 52 trillion KRW
Overseas stock settlement amount exceeds 100 billion USD
"Gold price decline signals possible shift in rate cut stance... liquidity expectations may be limited"

[Asia Economy Reporters Koh Hyung-kwang and Lee Min-woo] As concerns over the resurgence of the novel coronavirus infection (COVID-19) triggered a market correction, individual investors are flocking back to the stock market. Both the net purchase amount by individuals and the investor deposit funds, which represent standby funds in the stock market, have set record highs. Overseas stock trading volume also surpassed $100 billion (approximately 120 trillion KRW) for the first time ever. This is why experts say a more comprehensive second 'Donghak Ant Movement' has begun compared to before.

According to the Korea Exchange on the 24th, individuals have net purchased a total of 5.8988 trillion KRW from the beginning of this month through the 20th. This is the largest scale since the record-breaking crash in March when net purchases reached 11.4901 trillion KRW. It is a 52.3% increase compared to 3.8743 trillion KRW last month. With six trading days remaining until the end of the month, it is expected to exceed 6 trillion KRW for the first time since March.

The investor deposit funds, which are funds deposited into securities accounts by individual investors to purchase stocks, also recorded an all-time high. According to the Korea Financial Investment Association, as of the 20th, it was tallied at 52.6393 trillion KRW. The investor deposit funds had dropped back to the 50 trillion KRW level just one day after setting a new record of 51.1469 trillion KRW on the 13th. However, about 2 trillion KRW flowed in over four days, breaking the record again.

This period coincides with the time when the stock market declined as the COVID-19 resurgence intensified. The number of new domestic COVID-19 cases was in the tens until early this month but recorded triple digits for ten consecutive days from the 14th: 103 → 166 → 279 → 197 → 246 → 297 → 288 → 324 → 332 → 397. Along with this, the KOSPI hit a yearly high of 2458.17 on the 13th and then declined. The 2400 level was broken on the 14th, and it fell to 2270.85 on the 20th.

Overseas stock trading also surged. As of the 21st, the total settlement amount (buy + sell) of overseas stocks by domestic investors this year was $102.446 billion (approximately 120 trillion KRW). This is more than 2.5 times the overseas stock settlement amount last year ($40.9 billion, about 50 trillion KRW). It is the highest ever since the Korea Securities Depository began compiling foreign currency securities settlement data in 2011. If this trend continues, surpassing $150 billion this year is also anticipated.

The overseas stock settlement amount, which was only $3.1 billion in 2011, first exceeded $10 billion in 2015 ($13.9 billion). Since then, it has continued to grow by about $10 billion annually over the past three years: $22.7 billion in 2017, $32.5 billion in 2018, and $40.9 billion in 2019. This year, as major global stock markets plunged due to the spread of COVID-19, individual investors seized the opportunity to buy at the bottom, resulting in remarkable growth compared to the previous year.

Overseas investors concentrated on the United States. From the beginning of this year through the 21st, they bought and sold a total of $89.3 billion in U.S. stocks, accounting for 87.2% of the total overseas stock trading volume this year. Compared to the same period last year ($18.7 billion), this is an increase of 4.7 times (375.5%).

The stocks most frequently traded by investors were also mostly U.S. stocks. Among the top 50 traded stocks, 90% (45 stocks) are listed on U.S. exchanges. The top-ranked stock is Tesla, the American electric vehicle company. From the beginning of this year through the 21st, $8.279 billion worth of Tesla shares were traded. Following Tesla are Apple ($4.246 billion) and Microsoft ($3.797 billion), both beneficiaries of the untact (contactless) sector, ranking second and third. In terms of net purchase amount, the top three remain unchanged: Tesla ($1.385 billion), Apple ($1.05 billion), and Microsoft ($628 million).

In the securities industry, there are warnings that caution is needed as the gap between the real economy and the stock market may widen further due to the COVID-19 resurgence. In particular, the reversal in gold prices, a representative safe-haven asset, is analyzed as signaling a change in the liquidity-driven market. On the 23rd (local time), December delivery gold on the New York Mercantile Exchange closed at $1,947 per ounce. It had surged from around $1,500 at the beginning of the year to $2,000 earlier this month but has since fluctuated and fallen back to the $1,900 range.

Jo Byung-hyun, a researcher at Yuanta Securities, said, "Although the stock market has continued its rally overcoming the COVID-19 shock, issues such as the divergence between the real economy and the stock market and intensified price concentration on leading stocks have come into view. The increased volatility in gold prices means that the U.S. Federal Reserve's interest rate cut policy, which began last year, is changing, and the liquidity that supported the recent rally is likely to be limited."

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