[KOSPI 3300 Approaching] "Is It Our Ants' Turn to Step Up Again?"

KOSPI 3000 Era Retail Investors
Net Purchases Total 51 Trillion Won This Year
Expectations for Economic Recovery Post-COVID-19
Institutions and Foreigners Dominate Market Strategy

[Asia Economy Reporter Minji Lee] Individual investors are the main players behind the KOSPI 3000 era. They are also highly likely to be the key drivers opening the 3300 era. Since the COVID-19 outbreak, individual investors have filled the void left by foreign and institutional investors, leading the recovery of the KOSPI, which had fallen to the 1400 level. This month, they continue their net buying trend, pushing the KOSPI to an all-time high.

According to the Korea Exchange on the 17th, individual investors have purchased stocks worth 50.702 trillion KRW in the KOSPI market from the beginning of this year until the 16th. In just six months, this amount has surpassed the net buying amount of 47.4907 trillion KRW for the entire previous year. As a result, the total net buying amount by individuals since last year has reached 98.1927 trillion KRW. Despite continuous selling by institutions (33.2982 trillion KRW) and foreigners (16.0093 trillion KRW) this year, individuals have supported the domestic stock market and led the KOSPI to its highest level ever.

Looking at monthly figures, individuals bought stocks worth 22.3384 trillion KRW in January, accounting for 43% of the total net buying amount when the KOSPI first surpassed the 3000 mark. Subsequently, net purchases were 8.438 trillion KRW in February, 6.9403 trillion KRW in March, 5.8355 trillion KRW in April, and 6.7296 trillion KRW in May.

The increase in individual participation in stocks is due to growing expectations for economic recovery after the COVID-19 shock. Kim Minki, a research fellow at the Korea Capital Market Institute, explained, "The undervaluation of the stock market caused by the COVID-19 shock and the subsequent rapid rebound stimulated the latent investment demand of individual investors accumulated through a long-term low interest rate environment and rising real estate prices."

The stock most purchased by individuals in the KOSPI market is undoubtedly Samsung Electronics. Individuals bought Samsung Electronics shares worth 22.5744 trillion KRW. Conversely, during the same period, institutions and foreigners sold Samsung Electronics shares worth 12.8516 trillion KRW and 10.3041 trillion KRW, respectively, making different choices from individuals. Following Samsung Electronics, the stocks most purchased by individuals were Hyundai Mobis (3.9128 trillion KRW), SK Hynix (2.7025 trillion KRW), LG Electronics (1.7101 trillion KRW), Samsung SDI (1.5992 trillion KRW), Hyundai Motor (1.3999 trillion KRW), Samsung Electro-Mechanics (1.2276 trillion KRW), NAVER (1.1937 trillion KRW), and Kia (1.1119 trillion KRW). These are all large-cap stocks, with many related to the automotive and semiconductor sectors. This contrasts with institutions, which mainly net bought economically sensitive stocks such as Samsung Biologics (511.8 billion KRW), S-Oil (351.6 billion KRW), KT (325.1 billion KRW), Korea Zinc (242.2 billion KRW), SK IE Technology (203.8 billion KRW), LG Display (203.8 billion KRW), Hyundai Construction (168.5 billion KRW), and Amorepacific Group (151.8 billion KRW).

As individual stock investments increase, the market paradigm is also changing. The capital market, previously dominated by foreigners and institutions, now seems to be moving according to the individual investors' timeline. For example, securities firms, which used to gauge market sentiment based on institutions, are now busy reading individual investors' thoughts through platforms like YouTube. An industry insider said, "Since last year, as individuals' influence on supply and demand has grown, it has become important to understand which sectors and stocks individuals are buying and the psychological resistance levels."

The government is also taking similar steps. For instance, it has announced plans to completely reform the short-selling system, which had been strongly criticized by individuals as a ‘tilted playing field’ favoring foreigners and institutions, and to resolve issues to expand individual participation.

Meanwhile, concerns have been raised that the influence of individual investors might decrease as the stock market's upward momentum slows compared to last year. This is based on the judgment that if foreigners, who have been selling continuously, start buying domestic stocks in earnest, the supply-demand balance could shift. However, since the market's waiting funds remain at around 60 trillion KRW, it is expected that individuals' influence will not weaken. As of the 15th, investor deposits stood at 67.4763 trillion KRW, a roughly 120% increase compared to about 30 trillion KRW in January last year. After reaching a peak of 77 trillion KRW in early last month, it has maintained the mid-60 trillion KRW range.

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