Retail Investors Already Betting on a Rebound... Institutions Buying Inverse ETFs

Individuals Net Buy 450 Billion KRW in Leverage ETFs Tracking KOSPI Index Rise
"Stock Market Decline Due to US Tech Stocks Differs from Past IT Bubble"
Institutions Focus on Inverse ETFs... Dominate Top Net Buy Stocks

On the 25th, the KOSPI index opened at 2295.16, up 0.99% (22.49 points) from the previous trading day, as dealers were working in the Hana Bank dealing room in Jung-gu, Seoul. On the same day, the KOSDAQ index rose 1.36% (11 points) to 817.95, and the won-dollar exchange rate started at 1169.5 won, down 3.2 won from the previous trading day. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Minwoo Lee] As the domestic stock market has shown a downward trend in recent days, individual investors are quickly buying leverage products related to index rises, expecting a rebound. They are responding in advance, judging the recent decline as a temporary correction. This contrasts with institutional investors, who have been net buying inverse products that follow the index decline during the same period.

According to the Korea Exchange on the 25th, the KOSPI fell below the 2400 level as of the closing price on the 21st and continued to decline daily. The previous day, it dropped 2.59% in one day, closing at 2272.70. During this period, individual investors massively purchased exchange-traded funds (ETFs) that track index rises.

The most purchased stock was 'KODEX Leverage.' They bought a total of 247.8 billion KRW, ranking second among individual investors' net purchase stocks during the period. It is an ETF that tracks twice the daily return of the KOSPI 200 index. This means investors can expect twice the profit of the index's rise. The leverage product 'KODEX KOSDAQ150 Leverage,' which tracks the rise of the KOSDAQ150 index, was also purchased worth 209.7 billion KRW. ETFs tracking index rises took the 2nd and 4th places in the overall individual net purchase rankings. This appears to be based on the judgment that the recent decline is a temporary correction.

The domestic stock market decline began as the rapidly rising U.S. tech stocks faltered. Yesin Lee, a researcher at Shinhan Financial Investment, explained, "Money laundering suspicions involving major U.S. banks slowed the rotation speed toward value stocks, and the resignation of Nikola's founder and the fading expectations after Tesla's Battery Day accelerated the sorting within growth stocks." He added, "As the global stock market entered a correction, the domestic market is also giving up the relatively good returns compared to the beginning of the month." The BBIG (Bio, Battery, Internet, Game) sector, which led the domestic stock market's rise, also could not avoid the decline.

Leverage investors see this as qualitatively different from past IT and bio bubbles. Jinwoo Lee, a researcher at Meritz Securities, explained, "In the early 2000s, dot-com and IT companies were called bubbles, but after the IT bubble burst, the internet, once considered an illusion, eventually changed our lives. Therefore, the trend of technological development in secondary batteries, which are the foundation of electric vehicles, is not changing."

Meanwhile, institutional investors showed a different path from individuals. They rather bought a large amount of products that follow the index decline. From the 21st to the 24th, the top net purchase stock by institutional investors was 'KODEX 200 Futures Inverse 2X (247 billion KRW).' 'KODEX KOSDAQ150 Futures Inverse (52.8 billion KRW)' and 'KODEX Inverse (50.7 billion KRW)' ranked 5th and 6th, respectively. This indicates that they expect the downward market to continue for the time being.

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