Asset Management Firms' Net Selling for 43 Consecutive Trading Days, Why?

[Asia Economy Reporter Koh Hyung-kwang] Asset management companies handling large-scale funds have been selling stocks in the KOSPI market every single day for the past two months. The cumulative net selling amount during this period reached 4 trillion won. As the KOSPI surged past 3000, individual investors who wanted to invest directly in individual stocks massively redeemed indirect investment products such as funds, leading to a continuous net selling trend.

According to the Korea Exchange on the 12th, investment trusts (asset management companies) have shown a net selling streak for 43 consecutive trading days in the KOSPI market from November 6 last year until the day before yesterday. The amount of stocks sold during this period was 3.962 trillion won, nearly 4 trillion won. This accounts for one-third of the total net selling amount by institutional investors (12.2659 trillion won) during the same period. In contrast, individual investors and foreigners net purchased 9.649 trillion won and 2.556 trillion won respectively during this period.

The financial investment industry analyzed that asset management companies have been selling large amounts of stocks they held to pay redemption proceeds to customers, resulting in the ongoing net selling trend. According to financial information provider FnGuide, nearly 5 trillion won has been withdrawn from domestic equity funds in the past two months. From November 6 last year to the day before yesterday, the amount withdrawn from domestic equity funds reached 4.6196 trillion won. During this period, the net asset value of equity funds decreased by 10.7%, from 42.9296 trillion won to 38.310 trillion won.

Since early March last year, when individual investors began actively buying stocks amid a sharp market decline, the amount withdrawn from domestic equity funds has reached 16 trillion won. From March 2 last year, when the amount was 54.1332 trillion won, it sharply dropped by 29.2% (15.8232 trillion won) to 38.310 trillion won as of the day before yesterday. During this period, asset management companies net sold stocks worth 7.3271 trillion won in the KOSPI market. Private equity funds also sold stocks worth 4.0607 trillion won during the same period.

The steady continuation of fund redemptions recently is interpreted as individual investors actively engaging in direct investments such as stocks rather than indirect investment products like funds amid a rapidly rising stock market. A financial investment industry official said, "Due to the rush of investors redeeming equity funds, large-scale selling by investment trusts and private equity funds has continued in the stock market recently," adding, "It seems that investors prefer to invest directly in individual stocks rather than trusting funds that fail to keep up with the KOSPI's rise."

The sharp increase in investor deposits and the number of securities accounts also supports this phenomenon. Although individual investors bought over 9 trillion won worth of stocks in the KOSPI market in the past two months, investor deposits increased by more than 16 trillion won, from 51.14 trillion won to 67.54 trillion won. Investor deposits refer to funds that investors have placed in securities accounts waiting to be used for stock purchases. This is evidence that investors are actively engaging in individual stock investments.

The number of securities accounts has also increased significantly. In the case of Kiwoom Securities, which is popular among individual investors, 53,270 new accounts were opened on the 8th, marking the highest daily number ever recorded. Compared to the daily average of 1,870 accounts in 2019 and 9,110 accounts last year, this is an explosive increase. Seo Sang-young, a researcher at Kiwoom Securities, said, "Several years ago, indirect investment methods such as funds were common, but recently, with expanded access to information through online media like YouTube, the number of individuals redeeming equity funds and directly investing in individual stocks has steadily increased."

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