[In-Depth Look] Goal Scoring Ability for KOSPI 3000

Hwang Se-woon, Research Fellow at the Korea Capital Market Institute

As a soccer enthusiast, I have recently taken it upon myself to wake up at dawn once or twice a week to watch soccer matches unfolding far away on the European continent. The reason is none other than Son Heung-min. Playing for Tottenham Hotspur FC in the English Premier League (EPL), Son Heung-min is showcasing peak performance this year, leading his team to the top of the EPL standings. Securing the top spot in the EPL, which is filled with traditional powerhouses like Manchester United?where Park Ji-sung once played?and Chelsea, familiar to Koreans for sporting the Samsung Electronics logo for a decade, is truly an extraordinary achievement. Seeing Son Heung-min at the center of this success naturally inspires admiration.

Son Heung-min is recognized locally in the UK as a world-class player due to his outstanding speed stemming from exceptional physical attributes uncommon among East Asians, his excellent skills that hold up against the best players, and his admirable character that prioritizes the team and his teammates. Particularly, his remarkable finishing ability?never missing scoring opportunities when they arise?is unparalleled. This kind of 'decisiveness' offers many lessons for participants in the domestic stock market.

The biting cold wave that arrived with the first snow is freezing the Korean Peninsula solid. Nevertheless, the Korean stock market is blazing hot, breaking record highs day after day. Although concerns have been raised that the stock market might be moving too far ahead amid the peak of the COVID-19 pandemic, there is also a sense of anticipation that a long-awaited moment may finally be realized.

Starting at 100 on January 4, 1980, the KOSPI index surpassed 1,000 on March 31, 1989, and broke through 2,000 on July 25, 2007. It took a staggering 18 years to climb from 1,000 to 2,000. After surpassing 2,000, we did not enter the 3,000 territory even once for 13 years. It was not for lack of attempts. However, since crossing the 2,500 threshold in October 2017, the KOSPI has repeatedly failed to break through 3,000.

The disappointment at moments of frustration always felt like a lack of goal-scoring ability. This is the very issue that has consistently appeared when discussing Korean soccer. Watching the Korean national soccer team’s A matches, one often feels that the midfield battles are not overwhelmingly lost. Yet, the familiar scenario of failing to capitalize on one or two critical moments that could tip the outcome is tiresome. The chronic lack of goal-scoring ability, a significant challenge for Korean soccer, seems to be decisively addressed by Son Heung-min for now.

Considering where to start resolving the lack of goal-scoring ability in our stock market, one thing is clear: the answer must be found internally, not externally. Unfortunately, foreign investors have the greatest influence on the domestic stock market’s price movements. It is as if we are handing over our home turf to foreigners. If we continue to be led around until foreign investors score the monumental goal of breaking through KOSPI 3,000, domestic investors may remain long-term bench players rather than key players in the market.

Through the COVID-19 experience, the market has clearly witnessed the strength of the Donghak Ants (individual investors). However, it also seems challenging for the Donghak Ants alone to achieve KOSPI 3,000. The role of domestic institutional investors is crucial at this point. Let us understand that Son Heung-min’s many goals this season were greatly aided by his teammate Harry Kane. It is only when institutional investors and Donghak Ants together unleash internal strength?not foreign investors?that the chronic 'Korea discount' can be resolved and the goal of KOSPI 3,000 can be scored. We must remember that great goals are not stumbled upon but created.