Fearless 'Jingyeok-ui Gaemi', 'Selkorea' Hit by Bomb... 80 Trillion Storm Buying This Year

Individual 'Market Participant' Establishes Position... 80 Trillion Net Buying 'Market Cap Up 3% Largest Since 2006'
Last Week Foreigners' Net Selling 7 Trillion Bomb... Individuals Defend Index Decline with 10 Trillion Net Buying

[Asia Economy Reporter Lee Seon-ae] "80 trillion won" is the total net purchase amount by individual investors in the KOSPI and KOSDAQ markets this year. The 80 trillion won accounts for 3.05% of the market capitalization, marking the highest level since 2006. It is no exaggeration to say that individuals have now established themselves as strong investment players in the stock market. Especially last week, individuals' determination to defend against market declines stood out. They absorbed all the selling pressure from foreigners, effectively maintaining the KOSPI index above the 3100 level. The securities industry views individual investors' enthusiasm as the driving force behind the index's upward trajectory, moving from a correction and sideways market to a performance-driven market.

According to the Korea Exchange on the 17th, individual investors' enthusiasm for stocks this year is remarkable. From the first trading day of the year on January 4th to the market close on August 13th last week, individuals purchased stocks worth 68.870351 trillion won (excluding ETFs, ETNs, ELWs) in the KOSPI market. In the KOSDAQ market, net purchases amounted to 10.188035 trillion won. This easily surpasses last year's net purchase amount of 63.808245 trillion won (KOSPI 47.49067 trillion won + KOSDAQ 16.317575 trillion won).

Last week, individuals took a more active role as market participants. Foreigners sold stocks worth 7.097279 trillion won during the week of the 9th to the 13th, marking the highest weekly level ever. As a result, the KOSPI fell below 3200 for the first time in 11 weeks as of the closing price on the 13th. However, individuals absorbed all of this selling pressure. Their net purchase amount reached 10.033586 trillion won. By absorbing all foreign selling, they successfully defended the KOSPI index from falling below the 3100 level.

It is interpreted that individuals have confidence in the index's rise. The stock most sold by individuals last week was "KODEX 200 Futures Inverse 2X" (net sales of 462.794 billion won). This ETF inversely tracks the KOSPI 200 futures index by two times, earning nearly double profits as the KOSPI index falls, and is known as "Gopbus" (double inverse). Conversely, they actively bought the "KODEX Leverage" ETF (net purchases of 448.774 billion won), which tracks twice the upward movement of the index.

The securities industry's outlook aligns with individual investors' perspectives. Since foreign selling pressure was concentrated in semiconductor stocks (about 5 trillion won sold in the semiconductor sector), there is an opinion that last week's price decline is unlikely to spread as a broad market downturn.

Seojeonghoon, a researcher at Samsung Securities, said, "The fact that foreign selling in the domestic stock market is limited to specific sectors indicates that systemic risk remains low. Selective buying is occurring in sectors with notable earnings improvements (finance, transportation equipment, chemicals, steel, metals)." He emphasized, "Considering this, while sectoral differentiation may continue, worrying about further index declines is of little practical benefit." He added, "Moreover, the foreign market capitalization share in the semiconductor sector has unusually decreased compared to recent years, so selling pressure is expected to ease going forward. Above all, the fact that global semiconductor sector earnings estimates have not yet been revised downward supports the argument that stock prices were adjusted too far ahead."

Kim Younghwan, a researcher at NH Investment & Securities, also said, "The 12-month forward price-to-earnings ratio (PER) of the KOSPI is 11.2 times, the lowest level since March 2020 when the U.S. Federal Reserve supplied massive liquidity in response to COVID-19," and predicted, "The possibility of further declines below the 3000 level in the KOSPI is low."

However, some analyses suggest that until the Fed's tapering (asset purchase reduction) policy is confirmed, the KOSPI may continue to fluctuate within a range. Park Seokhyun, a researcher at KTB Investment & Securities, said, "For the KOSPI's upward attempt to meaningfully resume, concerns that the Fed might hasten tapering need to be dispelled," interpreting that "the turning point is expected to be the August Jackson Hole meeting."

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