Donghak Gaemi Net Purchase of 50 Trillion Won This Year Alone... Focus on Large-Cap Stocks and Untact Sectors 'Buying'

Bought 1.4 Trillion Won in Just One Day Yesterday
Deposits Still Waiting at 54.7 Trillion Won, the Largest Ever Recorded

[Asia Economy Reporters Koh Hyung-kwang and Geum Bo-ryeong] This year, the net purchase amount by individual investors in the domestic stock market surpassed 50 trillion KRW. This is the largest annual purchase amount since statistics began. The funds of the Donghak Ants, who are leading the domestic stock market, were found to be concentrated in large-cap stocks, untact (non-face-to-face), and bio-related stocks.

According to the Korea Exchange on the 1st, the cumulative net purchase amount by individual investors in the combined KOSPI and KOSDAQ markets from the beginning of this year to the end of last month totaled 51.177 trillion KRW. On the previous day, individuals added 1.4204 trillion KRW in net purchases in the stock market, pushing the cumulative amount past 50 trillion KRW for the first time.

Since the Korea Exchange began compiling trading trend statistics in 1999, the largest annual net purchase amount by individuals was 10.8742 trillion KRW recorded in 2018. This year, individuals have accumulated about five times more stocks than that. The explosive buying by individuals began in March, when the stock market fluctuated significantly due to the impact of COVID-19, with a monthly record high net purchase of 11.4855 trillion KRW. Since then, they have consistently purchased stocks worth 4 to 7 trillion KRW each month.

On the other hand, foreigners net sold 28.2709 trillion KRW in the domestic stock market this year, and institutional investors also sold 22.8583 trillion KRW worth of stocks. Individual investors absorbed more than 50 trillion KRW worth of sales from these major market players, driving the index upward. Kim Yong-gu, a researcher at Hana Financial Investment, said, "The buying trend of institutions, including pension funds that used to act as a safety net for the index, has been volatile this year, but individual investors' buying trend has been steady. It appears to be a buying trend anticipating a future rebound, but it certainly contributed to leading the index rise."

There are forecasts that funds from individual investors, whose net purchase amount exceeded 50 trillion KRW, will continue to flow into the stock market. According to the Korea Financial Investment Association, as of the 28th of last month, investor deposits classified as standby funds for the stock market reached 54.7561 trillion KRW, the largest ever. Hwang Se-woon, a researcher at the Capital Market Research Institute, explained, "Compared to bonds, higher returns are expected, and interest rates are at an all-time low, making stock investment advantageous. The fact that standby funds for the stock market are increasing even after recording the largest net purchase ever indicates that individuals are continuously seeking investment opportunities."

Individual investors mainly chose large-cap stocks in the KOSPI market. Looking at the monthly top net purchase stocks by individuals in the KOSPI market, before the COVID-19 spread intensified in January, Samsung Electronics led, followed by SK Hynix, Celltrion, LG Electronics, and Korea Electric Power Corporation. Especially, Samsung Electronics and SK Hynix, ranked first and second in market capitalization, consistently appeared among the top monthly net purchase stocks even after COVID-19.

With the start of the COVID-19 market, untact stocks began to stand out. Kakao, NAVER, and NCSoft, which did not even make the top net purchase stocks in January, gradually entered the list from March. In May, individual investors purchased NAVER and Kakao as the second and third most bought stocks, respectively. NAVER and Kakao have established themselves as stocks that individuals steadily accumulate, maintaining their positions among the top net purchase stocks last month as well.

In the KOSDAQ market, bio stocks were the clear choice. Among them, individuals particularly sought bio stocks related to COVID-19. In January, the top monthly net purchase stocks by individual investors in the KOSDAQ market included HL Biopharma, Helixmith, ABL Bio, and SillaJen, but from February, the landscape gradually changed with Seegene, Alteogen, and Genexine slowly rising.

Since July, following the listing of SK Biopharm, the IPO market has revived, and individuals have been buying public offering stocks. The top net purchase stocks in July included Aprogen, Somagen, Sindogiyeon, Withus Pharmaceutical, and Saltlux. All of these stocks were listed in July. Seo Sang-young, a researcher at Kiwoom Securities, explained, "This year, individual investors bought mainly large-cap stocks representing the market, unlike in the past, and they are also increasing their proportion in stocks expected to have growth potential or future profitability."