Market Cap Weight of Fund-Held Listed Stocks at 4.25%... Lowest Since May 2018
Equity Fund Assets Also Decreased by Over 11 Trillion Won This Year
[Asia Economy Reporter Minwoo Lee] The market capitalization ratio of listed stocks held by funds has dropped to its lowest level in the past two years. This is interpreted as a decline in indirect investment through funds as the direct investment craze by individual investors, known as the 'Donghak Ant Movement,' intensifies.
According to the Korea Financial Investment Association on the 8th, as of the end of last month, the listed stocks held by funds accounted for 4.26% of the total market capitalization of the domestic stock market. This is the lowest level since May 2018, when it recorded 4.16%. This figure had gradually increased since last year, reaching a three-and-a-half-year high of 4.83% at the end of December last year. However, it has steadily declined this year, with 4.67% at the end of January and 4.53% at the end of February.
During the same period, the net asset value of equity funds also decreased by more than 11 trillion won. At the end of December last year, it recorded 87.7092 trillion won, an increase of more than 6 trillion won from the previous month, marking the highest level since January 2018. However, it has steadily declined this year, showing a downward trend with 84.933 trillion won in January, 81.2209 trillion won in February, and 77.9489 trillion won in March, falling to 76.3435 trillion won last month.
The reason is interpreted as the 'Donghak Ant Movement,' where individual investors, judging the stock market decline caused by the economic slowdown due to the novel coronavirus disease (COVID-19) at the beginning of this year as a bottom, began to invest directly in stocks. Individual investors have been setting record-breaking purchase amounts this year. On the 4th alone, they net purchased 1.6978 trillion won in the KOSPI market, the highest ever since data collection began in 1999. The cumulative net purchase amount in March was 11.1869 trillion won, setting a monthly record. From the beginning of the year to the 7th, the cumulative net purchase amount was 26.3331 trillion won, contrasting sharply with the net sale of 4.7921 trillion won during the same period last year.
The number of people borrowing money to invest in stocks has also increased. According to the Korea Financial Investment Association, as of the 6th, the balance of credit loans, where individual investors in the KOSPI and KOSDAQ markets borrow money from securities firms to buy stocks, was 9.1483 trillion won. This has been increasing for 26 consecutive days since the 24th of last month.
Kim Young-ik, an adjunct professor at Sogang University Graduate School of Economics, pointed out, "In a situation where fund returns are generally poor and the index has fallen, individual investors are flocking to the stock market, thinking it is a bottom and driven by vague expectations of economic recovery. Although some sectors have shown signs of recovery, it is still difficult to conclude that the economy has recovered from COVID-19, so individuals should be cautious in their investments."
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