Amid Fears of COVID-19 Resurgence... Retail Investors Start Buying Large-Cap Stocks First

Top Individual Investors' Net Buying Focuses on Large-Cap Stocks
Sector and Earnings Outlook Vary, but Buyers Trust 'Fundamental Strength'
Foreigners and Institutions Buy Bio and Untact Theme Stocks
"Investing Mainly in Stability Amid COVID-19 Resurgence Concerns... Risk Management Needed"

[Asia Economy Reporter Minwoo Lee] While the stock market has recently experienced sharp fluctuations, individual investors have been focusing on buying large-cap stocks. This contrasts with institutions and foreign investors who concentrated on themes such as untact (contactless) and bio sectors. As concerns over economic slowdown intensified with the government considering the implementation of social distancing level 3 due to fears of a resurgence of COVID-19, it is interpreted that investors are putting their money into companies with reliable financial strength.

According to the Korea Exchange on the 26th, from the 14th to the 25th, the stock most purchased by individual investors was SK Hynix. During this period, the KOSPI continuously rose after COVID-19, hitting a record high on the 13th (2458.17), but then fell below the 2400 mark and shifted to a downward trend. Individuals net bought SK Hynix for a total of 423.1 billion KRW during this period. On the 19th alone, they purchased 302.5 billion KRW worth, setting a daily net buying record for the year. Besides this, individual investors concentrated on large-cap stocks. The top five net purchased stocks?Samsung Electronics (276 billion KRW), LG Chem (171 billion KRW), Hyundai Motor (135.8 billion KRW), among others?were all large companies ranked within the top 10 by market capitalization. This is quite different from the atmosphere in early last month (1st to 10th), when individual buying was concentrated on leading untact and bio stocks such as SK Biopharm, NAVER, Celltrion Healthcare, and Samsung Biologics.

On the other hand, institutions and foreigners relatively focused on the themes of untact and bio, respectively. During the same period, institutions bought Kakao, a representative untact stock, the most, with a net purchase of 114 billion KRW. NAVER was also among the top five, with 58.6 billion KRW purchased. Additionally, they net bought ETFs such as 'KODEX 200 Futures Inverse 2X' and 'KODEX WTI Crude Oil Futures (H)' for 63 billion KRW and 60 billion KRW, respectively. Foreign investors also accumulated ETF products the most during this period, including KODEX 200 (119.7 billion KRW) and 'Tiger MSCI Korea TR (114.5 billion KRW)'. Alongside these, pharmaceutical and bio stocks such as Celltrion (59.2 billion KRW), Alteogen (46.5 billion KRW), and Shinpung Pharmaceutical (37.5 billion KRW) were among the top net purchases by foreigners.

As concerns over economic slowdown grew with the government discussing the introduction of social distancing level 3 due to the resurgence of COVID-19, it is interpreted that individual investors showed a tendency to flock to large-cap stocks out of anxiety. Office worker Yongwoo Jeong (38, pseudonym) also liquidated his existing theme stocks and recently added Samsung Electronics and SK Hynix to his portfolio. Jeong said, "As time passes, COVID-19 is spreading rapidly, so rather than individual themes, I chose large-cap stocks with solid fundamentals. I think it’s better to stay cautious and avoid themes for the time being."

Experts foresee that stock market volatility may increase due to failures in normalizing economic activities and ongoing uncertainties. Although the 'individual market'?where individual investors lead the domestic stock market due to real estate regulations and low interest rates compressing investment options into stocks?continues, optimistic forecasts are premature, and cautious sentiment may grow.

Kim Hyung-ryul, head of the Kyobo Securities Research Center, said, "This month, the average daily trading volume exceeded 1% of market capitalization, showing an increasing concentration on top market cap stocks. In such a situation, the emergence of unexpected negative factors could significantly increase market volatility. Even if market-friendly policies are implemented, they may be insufficient to bring about real changes in economic activities," expressing concern.

Professor Kim Young-ik of Sogang University Graduate School of Economics pointed out, "As the resurgence of COVID-19 becomes a reality, individual investors seem to prefer stability-focused investments. Since the gap between the still significant real economy and the stock market could widen further due to this resurgence, individual investors should also engage in risk management."

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