Hold Kospi at 3000... Retail Investors Invest 5 Trillion Won

Net Purchase of 4.7262 Trillion KRW in KOSPI and KOSDAQ Over 3 Trading Days
Responding with 2.117 Trillion KRW Purchase in One Day on the 6th Amid Foreign and Institutional Selling
Deposits at 69 Trillion KRW, Strong Capital Base Suggests Continued Buying This Year
Experts Advise Against Blind Investing... Government Urges Caution on Increased Volatility

[Asia Economy Reporters Oh Ju-yeon and Joo Sang-don] As the KOSPI hovers around the 3000-point mark, individual investors who had paused their buying in November and December last year are reigniting their purchases. Supported by abundant liquidity, individual investors continue to have strong purchasing power following last year. Additionally, with low interest rates and real estate regulations increasing interest in the stock market more than ever, it is expected that individual buying will persist this year as well.

According to the Korea Exchange on the 7th, individual investors have net purchased nearly 5 trillion won across both the KOSPI and KOSDAQ markets in just three trading days since the beginning of this year. From the 4th to the 6th, individuals bought 3.4887 trillion won worth of stocks in the KOSPI market and 1.2375 trillion won in the KOSDAQ market, totaling 4.7262 trillion won in net purchases.

Compared to the 8.673 trillion won net purchases over two months when the index rose 24.92% from 2300.16 to 2873.47 in November and December last year, the current accumulation intensity is relatively strong. At that time, the market was led by foreigners who purchased 3.24 trillion won worth of stocks.

However, as the KOSPI crossed into the 3000 range, changing the thousand-digit number, foreigners and institutions began selling to realize profits, turning into a selling trend. From the 4th to the 6th, foreigners and institutions net sold 526.8 billion won and 3.0951 trillion won worth of stocks, respectively.

Individual investors absorbed all these shares. Especially on the 6th, when the KOSPI surpassed 3000 intraday for the first time in history but then fell back to around 2960, individuals bought 1.7293 trillion won worth of stocks in a single day. Including the KOSDAQ market, where foreigners (-102 billion won) and institutions (-251.5 billion won) sold shares, individuals purchased 388 billion won more, totaling 2.117 trillion won invested in stocks that day.

The financial strength to buy stocks worth trillions in a single day remains ample. According to the Korea Financial Investment Association, as of the 5th, investor deposits, which are funds waiting to be invested in the stock market, reached a record high of 69.44 trillion won. This is about 2.5 times the 27 trillion won recorded in January 2020, a year ago. Based on this solid ammunition, it is analyzed that the buying momentum of individuals who supported the stock market's sharp decline due to the COVID-19 impact last year will continue this year.

Yoon Chang-yong, head of the Shinhan Financial Investment Research Center, said, "Current stock prices justify valuations due to low interest rates, and favorable supply-demand conditions from individual investors and retirement pension funds will continue."

Jung Yeon-woo, head of the Daishin Securities Research Center, also stated, "With an unprecedented level of liquidity, individual investors have sufficient capacity for additional purchases," adding, "If the won-dollar exchange rate stabilizes below the 1100 won level, foreign net buying is also likely to flow in."

This year, the stock most purchased by individuals remains Samsung Electronics. Individuals bought 2.2948 trillion won worth of Samsung Electronics shares and 331.1 billion won worth of Samsung Electronics preferred shares, ranking first and third in net purchases, respectively.

Among exchange-traded funds (ETFs) tracking composite indices, KODEX Leverage was purchased worth 108.7 billion won, ranking ninth in net purchases. Additionally, 113.4 billion won was invested in TIGER KRX Secondary Battery K-New Deal, reflecting expectations for Korea's New Deal projects this year.

However, since the index has rapidly risen over the past two months, reaching the 3000 level in a short time, there is also a view that the desire to realize profits is high, and a correction could come at any time. Warnings have been issued against "panic buying" where investors jump in late fearing missing out in a bull market, reckless investments using loans taking advantage of low interest rates, and "blind investments" swayed by baseless themes.

With the stock market's bullish outlook this year, the number of new stock accounts opened has surged since the beginning of the year. For example, Kiwoom Securities reported that on the first trading day of the new year, the 4th, 33,925 new accounts were opened, setting a daily record for new account openings, and on the 5th, 39,756 accounts were opened, breaking the record again in just one day. The company explained that over 117,000 new accounts have already been created this year. Alongside this, the balance of credit loans for stock trading exceeded 19.6 trillion won as of the 5th, reaching an all-time high. If the index falls sharply, this could act as a trigger causing massive losses for individual investors.

Among individual investors hopeful for the stock market rise this year, there remains a burden regarding the direction after the KOSPI 3000 mark. Individuals who have not yet sold about 4 trillion won worth of inverse ETFs are preparing risk hedging measures against index declines by purchasing 53 billion won worth of KODEX 200 Futures Inverse 2X this year. Some expect volatility when short selling resumes in March. Kim Seung-hyun, head of the Yuanta Securities Research Center, predicted, "The explosively increased proportion of individual trading may peak in the first quarter and then decline," adding, "Considering the lag in distribution, the buying trend will continue until the first half of the year but with reduced intensity."

The government also expressed concerns that the real economy must support the stock market for continued rises.

Kim Yong-beom, First Vice Minister of Strategy and Finance, stated that day, "For the stable upward trend in financial markets to continue, success in COVID-19 containment and recovery of the real economy that meet market participants' expectations must be supported."

He urged special caution regarding the possibility of increased volatility in financial markets. Vice Minister Kim emphasized, "Careful management is required to ensure that the liquidity expanded during crisis response does not undermine financial sector stability, which is a key task for macroeconomic and financial authorities this year," adding, "We will pay close attention to risk factors surrounding financial markets and the possibility of increased market volatility, and do our best to achieve a rapid and strong economic recovery."

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