In an Uncertain Bear Market, the 'National Stocks' Plummet... Retail Investors Resign Themselves

KOSPI Declines for Nearly a Year After Peak
Large-Cap Stocks with High Retail Investor Ratios Also Plunge and Trade Sideways
Retail Investors Say "Choice Is Practically Impossible"
Global Major Investment Banks Simultaneously Lower KOSPI Investment Ratings and Outlooks

The KOSPI entering the 2500 range last May. [Image source=Yonhap News]

[Asia Economy Reporter Kang Wooseok] The decline in the domestic stock market is becoming serious. The downturn and sideways movement in the Korea Composite Stock Price Index (KOSPI) market have continued for nearly a year, and large-cap stocks, known as "national stocks," have repeatedly moved sideways after a sharp drop. As a result, "ant investors" (individual investors) are expressing resignation, saying they are in a situation where they "cannot even make a choice."

Recently, the KOSPI has been characterized by continuous declines and sideways trends. After reaching a record high of 3,300 points in June last year, the KOSPI has been on a downward trajectory, plummeting to the 2,500 level before barely recovering to the 2,600 level, struggling to regain footing.

In particular, the poor performance of large-cap stocks, which have a high investment ratio among individual investors and are called "national stocks," stands out. According to data submitted by the Korea Securities Depository, Kookmin Bank, and Hana Bank to Representative Yoon Chang-yeon of the People Power Party, the top 10 stocks held by individual investors as of last March included Samsung Electronics, Naver, and Kakao.

Samsung Electronics, which ranked first in individual investor holdings, surpassed 90,000 KRW for the first time in January last year but has since shown a steady decline. Naver and Kakao have experienced similar trends. Naver reached a peak of 450,000 KRW in September last year but then entered a downward trend, falling to the 260,000 KRW range.

Kakao also recorded 170,000 KRW in June last year but suffered repeated crashes due to adverse factors such as government regulations following controversies over infringement on small businesses and mass stock sales by Kakao Pay executives. In response, Kakao announced a mid-to-long-term shareholder return policy in February, including share buybacks and cash dividends, attempting to boost its stock price. Kakao CEO Namgoong Hoon declared during his nomination period that he would withhold all salary and incentives until Kakao's stock price recovers to 150,000 KRW, receiving only the statutory minimum wage.

Employees are working while the KOSPI remains in the 2500 range as of last May.

The domestic market downturn is analyzed to be influenced by the global trend of interest rate hikes and economic slowdown caused by Russia's invasion of Ukraine.

Individual investors investing in domestic stocks are now expressing a state of "resignation." A salaried worker, Mr. A, who said he invested in "Kakao," stated, "I thought I bought at a relatively low point, but the current loss rate is significant," adding, "Even if I cut losses, the market is so bad that I can't find a suitable place to invest."

Job seeker Mr. Jo (26), who purchased "Samsung Electronics" stock, said, "Honestly, there isn't really a situation where I can make a clear choice. The market is just too bad," adding, "Since it's a mega-cap stock, I don't consider cutting losses and plan to invest long-term, thinking it will rise someday and there will be opportunities. In a way, it's a forced 'jangtu' (long-term investment)."

There is also an observed phenomenon of large-scale withdrawal of funds from the market. According to the Korea Financial Investment Association, as of May 31, investor deposit funds, which are waiting funds for the stock market, totaled 57.5671 trillion KRW. Compared to May last year (77.9018 trillion KRW), more than 20 trillion KRW has disappeared, indicating a cooling of enthusiasm for stock investment.

Meanwhile, the outlook for the domestic stock market is also not optimistic. The possibility of further global interest rate hikes remains open, and major global investment banks are lowering their KOSPI investment ratings and forecasts.

According to the financial investment industry, Nomura Securities of Japan downgraded its investment rating for Korea from "Overweight" to "Neutral" in its "Asia Excluding Japan Equity Market Strategy" report released on the 31st of last month. Nomura Securities explained the downgrade by stating, "Korea is exposed to China's and the global economic slowdown and global stock market volatility, and policy uncertainty remains after the presidential election."

JPMorgan also lowered its KOSPI forecast from 3,300 to 3,000 in last month's report, reflecting the macroeconomic environment and inflation. JPMorgan explained, "We are lowering the KOSPI forecast due to the Fed's hawkish shift, inflationary pressures affecting margins across all industries, and the weakening of the Korean won."

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