20 Trillion Won Net Buying This Year... 'Gaemi' Becomes the Stock Market's Savior

[Asia Economy Reporter Koh Hyung-kwang] This year, individual investors have purchased stocks worth well over 20 trillion won in the domestic stock market. Despite the rollercoaster ride caused by the impact of the novel coronavirus disease (COVID-19), individuals have been steadily buying stocks. It is being evaluated that individual investors, rather than pension funds, are playing the role of saviors preventing the index from falling during the market crash.

According to the Korea Exchange on the 26th, individuals have net purchased stocks worth a total of 19.0946 trillion won in the KOSPI market from the beginning of this year until the day before. Following 4.483 trillion won in January, the net purchase amount in February also reached 4.8974 trillion won. This month alone, they bought stocks worth 9.7142 trillion won, which is twice the amount purchased in January and February combined. This is the largest monthly purchase amount since the Korea Exchange began compiling trading trend statistics by investor type in September 2001.

This is a completely different pattern from last year when individuals net sold stocks worth 11.8012 trillion won in the KOSPI market, including net sales of 3.2295 trillion won in December alone. In particular, while foreigners and institutions dumped stocks worth 14.154 trillion won and 7.0426 trillion won respectively this year, fueling the index decline, individual investors absorbed most of these sales and contributed to defending the index.

Since the KOSPI index began to fall sharply on the 17th of last month until the day before, out of 28 trading days, individual investors showed net buying dominance on all but two days. Especially, during the seven trading days from the 11th to the 19th, when the KOSPI index plunged more than 500 points, individuals bought stocks every day without fail, ranging from 240 billion won to 1 trillion won daily. The net purchase amount during this period alone reached 4.7 trillion won.

Individuals also purchased stocks worth 2.6954 trillion won in the KOSDAQ market this year. Combining KOSPI and KOSDAQ, the net purchase amount increases to 21.79 trillion won. Seo Sang-young, a researcher at Kiwoom Securities, explained, "It is extremely unusual for individual investors to buy around 5 to 10 trillion won every month," adding, "It appears to be a strategy of buying at low prices by taking advantage of the market crash."

Typically, when the stock market plunges, institutional investors such as pension funds step in to act as a safety net, but this year, individuals seem to be fulfilling that role. Although pension funds have increased their purchase volume since this month, it is negligible compared to the buying power of individuals. The net purchase amount by pension funds within the KOSPI this year is 2.995 trillion won, which is about 15% of the individual buying power (19.0946 trillion won). Kim Yong-gu, a researcher at Hana Financial Investment, said, "While pension fund buying power fluctuates in a crash market, individual buying power is steady," and added, "It seems to be buying with a view to a future rebound, but it certainly helped reduce the index's decline."

Individuals concentrated their purchases on semiconductor stocks. The top three stocks in terms of net purchases by individuals this year are Samsung Electronics, Samsung Electronics Preferred, and SK Hynix, with amounts of 7.4211 trillion won, 1.5132 trillion won, and 848.4 billion won respectively. Half of the total purchase amount (9.7827 trillion won) was invested in semiconductors.