Stock Market Heats Up but Accounts Show 'Blue Bruises'... 'Gopbus Ants' Can't Smile Despite Donghak Ants' Victory

KOSPI Surpasses 2190 Intraday on 4th
From April 1 to June 3, Top Net Purchase by Individual Investors: 'KODEX 200 Seonmul Inbeoseu 2X'
Accumulated 1.5 Trillion Won...Return Rate -40%

[Asia Economy Reporter Oh Ju-yeon] The KOSPI surged to the 2190 level, setting off flames day after day, leaving individual investors who purchased 1.5 trillion KRW worth of 'Gopbus (KODEX 200 Futures Inverse 2X)' with a gloomy outlook. These investors bought KODEX 200 Futures Inverse 2X, which invests inversely to the index rise, in preparation for a second decline after the KOSPI rebounded from the 1400 level to the 1700 level. However, with the index steadily rising without a single drop, their returns are on the verge of being halved.

According to the Korea Exchange as of 9:28 AM on the 4th, KODEX 200 Futures Inverse 2X was trading at 5,120 KRW, down 2.85% from the previous trading day. During the session, it fell to 5,005 KRW, marking a roughly 40% decline compared to 8,830 KRW on April 1. This is because the KOSPI, which had plunged due to the impact of the novel coronavirus (COVID-19), has continued to rise based on abundant liquidity in the market.

KODEX 200 Futures Inverse 2X is a product that profits when the index falls, tracking twice the inverse of the daily return of the KOSPI 200 futures index. If the daily index falls by 1%, it yields a 2% profit, but conversely, if it rises by 1%, it incurs a 2% loss. Since it is not based on cumulative returns, profits are limited when the stock price fluctuates repeatedly within a range (box range). Especially when investing against the trend and holding for a long period, losses can snowball because the daily volatility doubles, so caution is necessary.

From April 1, when individuals started accumulating Gopbus, the KOSPI rose 29.99% from 1,685.46 to 2,191.00 during the session on this day. However, individuals purchased 1.5145 trillion KRW worth of Gopbus by the close of trading on the 3rd.

After betting on a decline in the index in April and buying in large quantities, there was a brief pause last month, but this month, individuals have once again ranked KODEX 200 Futures Inverse 2X as the top net buyer, continuing their accumulation.

From the 1st to the 3rd of this month, individuals bought 222.7 billion KRW worth of KODEX 200 Futures Inverse 2X. They also scooped up 61.8 billion KRW worth of KODEX Inverse, which tracks the index movement at a 1:1 ratio, resulting in a total net purchase of about 300 billion KRW over three trading days.

Contrary to the hopes of individuals riding the Gopbus, securities firms forecast that while there may be 'short-term adjustments,' a sharp decline like that in March is unlikely to occur.

Lee Kyung-min, a researcher at Daishin Securities, said, "It is true that short-term overheating and valuation burdens are increasing. At the current index and valuation levels, short-term adjustments can occur at any time," but added, "However, the possibility of a sharp decline like in March is judged to be low."

He predicted, "Considering the strong liquidity momentum and the realization of economic recovery expectations in the second half of the year, it is necessary to use this as an opportunity to increase weight. Although uncertainties that could trigger short-term adjustments are piling up, liquidity and fundamental momentum are strong and are expected to strengthen further."