Catching Falling Blades... The Ants' Cries Grow Louder

Ants Lead Net Buying with Kakao at 1.0832 Trillion Won, Followed by Samsung Electronics and NAVER
Focused Betting on Declining Stocks...Top 5 Stocks Average 18.4% Loss
Contrasting Foreign and Institutional Returns...Experts Warn "Trend Rebound Difficult"

[Asia Economy Reporters Jihwan Park, Minji Lee]"I thought I bought at the bottom, but the price keeps falling endlessly. I never expected Kakao to drop to the 80,000 KRW range."

Not only in the case of Kakao, but among the top 5 stocks most purchased by individual investors this year?including NAVER, KakaoBank, and Krafton?none have seen their stock prices rise. The stocks they bought have incurred an average loss of 18.4%. This contrasts with institutional and foreign investors, who have managed to achieve returns of 1.6% and 5.3%, respectively, even amid the domestic stock market correction.

According to the Korea Exchange on the 24th, the stock most purchased by individuals from the beginning of this year until the 21st was Kakao. Individuals bought stocks worth 1.0823 trillion KRW during this period. Following Kakao were Samsung Electronics (965.9 billion KRW), NAVER (860.4 billion KRW), KakaoBank (528.5 billion KRW), and Krafton (419.4 billion KRW), in that order. Since most of these stocks have recently experienced sharp declines, investors engaged in dollar-cost averaging (buying additional shares at lower prices to reduce the average purchase price) hoping for a rebound.

Except for Samsung Electronics, known as the "national stock," all have seen their stock prices fall by double digits this year due to concerns over declining profitability. Kakao’s stock dropped nearly 20% after management’s “eat-and-run” controversy surfaced on the 14th of last month, coupled with forecasts that the fourth-quarter earnings improvement would not be significant. NAVER (-12.0%) showed a downward trend as investment sentiment turned negative due to declining earnings and regulatory risks from the government’s platform company regulations. KakaoBank (-25.8%) has experienced consecutive stock price declines due to disappointing fourth-quarter earnings caused by government loan regulations and management’s eat-and-run controversy. Krafton (-32.6%) is trading at nearly 40% below its IPO price (498,000 KRW) amid concerns over earnings decline following the poor performance of its new release, “New State.”

On the other hand, the top 5 stocks with net purchases by foreigners and institutions have shown relatively good returns. Although foreigners hold more declining stocks, their overall return is positive at an average of 1.6%. LG Chem and KB Financial led the gains with increases of 12.8% and 9.6%, respectively. Samsung Electronics (-3.4%), Hyundai Glovis (-1.8%), and SK Hynix (-9.2%) declined.

Institutions’ returns are even better. Among the top 5 stocks, all except KODEX 200 (-4.6%) rose. Most stocks, including KODEX 200 Futures Inverse 2X (9.5%), KT (3.8%), SK Innovation (5.7%), and KODEX KOSDAQ 150 Futures (12.1%), increased. The average gain among these five stocks reached 5.3%.

Whether individual investors’ aggressive dollar-cost averaging will succeed remains uncertain. Individuals are optimistic that the domestic stock market will rebound and continue an upward trend. This month, individuals purchased 365.7 billion KRW worth of “KODEX Leverage,” which seeks to achieve twice the KOSPI 200 index’s rise, and also net bought 325.1 billion KRW worth of “KODEX KOSDAQ 150 Leverage.” These rank 6th and 7th among individual investors’ net purchases, respectively. Conversely, institutions, which have achieved high returns since the new year, are betting on index declines, showing the opposite trend. Institutions bought 519.8 billion KRW worth of KODEX 200 Futures Inverse 2X, ranking first in net purchases. They also bought 115.5 billion KRW worth of KODEX KOSDAQ 150 Futures Inverse, ranking fifth in net purchases.

Experts’ opinions are not much different from the institutions’ movements. Roh Dong-gil, a researcher at Shinhan Financial Investment, explained, "The essence of the current stock market is concerns over monetary policy tightening due to inflation, so it is too early to expect a trend reversal until inflationary pressures ease. If buying domestic stocks, it is advisable to focus on sectors with low valuations and less risk of earnings decline."

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