Financial Supervisory Service, "Market Volatility Expands... Individuals Should Invest Cautiously"

[Asia Economy Reporter Eunmo Koo] The Financial Supervisory Service (FSS) urged individual investors to invest cautiously as the volatility of the domestic stock market has increased due to the novel coronavirus disease (COVID-19) outbreak, making predictions difficult.

According to the FSS on the 7th, the KOSPI 200 Volatility Index (VKOSPI) has shown an increasing trend, rising from 14.69 points at the end of December last year to 19.29 points at the end of January this year, 33.81 points at the end of February, and 48.55 points at the end of March. This indicates that market uncertainty has expanded, significantly increasing volatility in the domestic stock market.

On the other hand, the net purchase volume of stocks by individual investors (combined KOSPI and KOSDAQ) was about 25 trillion won in total, with 6.3 trillion won in January, 6 trillion won in February, and 12.7 trillion won in March. During the same period, foreigners net sold 16.3 trillion won, and institutions net sold 9.6 trillion won.

The FSS believes that a considerable number of individual investors participating in the stock market are new investors who do not fully recognize the inherent risks in the stock market.

An FSS official stated, "The expansion of stock market volatility triggered by COVID-19 is different from past financial crises, making future stock market predictions very difficult," and added, "Therefore, individual investors, especially inexperienced new investors, need to invest wisely and cautiously."

The FSS emphasized the investment precaution that "high expected returns come with high risks." It also advised considering the investment period and the purpose of funds, warning that stock investments using loans carry even greater risks. Additionally, it reminded investors that all results from stock investments are solely their own responsibility.