KOSPI Surges Past 2,100 in Two Months
4.8 Billion Won Lost Out of 1.3666 Trillion Invested
Individual Investors Keep Buying Instead of Realizing Losses
[Asia Economy, reporter Oh Jooyeon] Although the KOSPI, which plunged to the 1,400 level in March due to the COVID-19 outbreak, has rebounded sharply to surpass the 2,100 mark in just two and a half months, the market is celebrating while individual investors who put more than 1 trillion won into inverse products are left dismayed. Over the past two months, as the index has steadily risen, inverse investors have not even had the chance to cut their losses and are instead left holding onto mounting losses. In particular, those who invested in leveraged inverse products, known as "Gopbeoseu," which move twice as much as the underlying index, are likely to face even greater losses.
According to the Korea Exchange on June 3, from April 1 to June 2, the product most heavily purchased by individual investors was the 'KODEX 200 Futures Inverse 2X,' with net purchases totaling 1.3666 trillion won.
KODEX 200 Futures Inverse 2X is a product that generates profits only when the index falls, tracking twice the daily inverse return of the KOSPI 200 futures index. If the daily index falls by 1%, the product yields a 2% profit, but conversely, if the index rises by 1%, it results in a 2% loss. Since returns are not calculated over a period but on a daily basis, profits are limited when the market moves sideways. Especially when investors hold the product for an extended period while betting against the prevailing trend, losses can snowball as the product falls by twice the daily fluctuation, so caution is needed.
During the period when individuals were buying Gopbeoseu, the KOSPI rose 23.84% from 1,685.46 to 2,087.19, and the KOSPI 200 index climbed by about 22%. In contrast, the price of KODEX 200 Futures Inverse 2X dropped 35.79% from 8,830 won to 5,670 won. It is estimated that about 480 billion won out of the 1.3666 trillion won invested in Gopbeoseu has evaporated.
Nevertheless, rather than realizing their losses, individual investors have chosen to "hold on," continuing to purchase inverse products whenever the KOSPI approached the 2,000 level.
Last month, individuals favored stocks like Samsung Electronics, NAVER, and Kakao over inverse products, but this pattern shifted again at the end of the month. Since May 25, individuals have been net buyers of KODEX 200 Futures Inverse 2X for seven consecutive trading days. As a result, since the beginning of June, KODEX 200 Futures Inverse 2X (74.8 billion won) has become the number one net purchase among individual investors.
Despite the KOSDAQ index rising steadily by 35.93% from 551.84 on April 1 to 750.14 during trading on this day, individuals have taken the opposite bet. Believing that the KOSDAQ index would decline, individuals have poured 28.7 billion won into 'KODEX KOSDAQ 150 Futures Inverse' since the beginning of June, making it the fifth most purchased product by individual investors so far.
Lee Kyungmin, a researcher at Daishin Securities, said, "In the second half of the year, the KOSPI is expected to enter a second phase of upward momentum, driven by liquidity and expectations of economic recovery," adding, "We anticipate a continued upward trend in both global stock markets and the KOSPI."
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