The 'KOSPI 3000' Hit Drama... The Lead Role Belongs to 'Donghak Ants'

From the First Opening Day This Year, Individuals Net Bought Stocks Worth 1.031 Trillion KRW
Top 1 and 2 Net Bought Stocks Are Samsung Electronics and Samsung Electronics Preferred

[Asia Economy Reporter Kum Boryeong] The driving force behind the KOSPI 3000 era is individual investors known as 'Donghak Ants.'

According to the Korea Exchange on the 6th, individual investors net purchased stocks worth 1.031 trillion won in the KOSPI market on the first trading day of 2021, January 4. On the opening day, the KOSPI closed at 2,944.45, up 2.47% (70.98 points) from the previous trading day, marking the first time in domestic stock market history to surpass the 2,900 level. On the 5th, which closed at 2,990.57, individual investors bought stocks worth 728.4 billion won. Meanwhile, institutions and foreign investors sold stocks worth 536.3 billion won and 208.9 billion won, respectively.

The KOSPI broke its previous record by closing at 2,602.59 on November 23 last year. Since then, it surpassed the 2,700 level on December 4 and the 2,800 level on December 24, continuously making new history. From November 23 last year to the day before yesterday, the KOSPI rose on all but 8 of the 29 trading days.

While the KOSPI was rapidly climbing, individual investors continued their net buying trend. From November 23 last year, when the KOSPI surpassed 2,600, until the day before yesterday, individual investors accumulated a total of 7.6905 trillion won worth of stocks. In contrast, foreign and institutional investors net sold 2.3109 trillion won and 5.4608 trillion won, respectively, during the same period.

The 'ants' showed their strength multiple times. On November 30 last year, they set a daily net buying record by purchasing stocks worth 2.2206 trillion won in a single day. That day, foreign investors net sold stocks worth 2.4378 trillion won. Individual investors absorbed the foreign selling volume. On the ex-dividend date of December 29, individual investors bought stocks worth 2.197 trillion won in one day, marking the second-highest daily net buying record. Although they net sold a total of 2.135 trillion won over three trading days from December 23 to 28 to avoid the major shareholder capital gains tax, they bought back the stocks in just one day.

The stock most loved by the Donghak Ants was Samsung Electronics. From November 23 last year to the day before yesterday, Samsung Electronics was the top stock in terms of net purchases by individual investors. The second was Samsung Electronics preferred shares. During this period, individual investors net purchased Samsung Electronics and Samsung Electronics preferred shares worth 4.4936 trillion won and 2.8043 trillion won, respectively.

The stock fever among individual investors can also be confirmed through securities firms' Comprehensive Asset Management Accounts (CMA). According to the Korea Financial Investment Association, the individual CMA balance was 45.4301 trillion won on January 2 last year, slightly decreased to 44.764 trillion won on March 19 when the KOSPI dropped to the 1,400 level, but then showed an increasing trend, reaching 56.8157 trillion won on January 1 last month. On the 4th, it increased further to 58.5879 trillion won. The number of individual CMA accounts was 15,964,469 on January 2 last year but steadily increased, surpassing 20 million on the 3rd of last month. On the 4th, it was confirmed at 20,739,681 accounts. Investor deposits (excluding on-exchange derivatives trading deposits) also more than doubled from 29.8599 trillion won on January 2 last year to 68.2873 trillion won on the 4th of this year.

The so-called 'money move' phenomenon, where large sums of money with nowhere to go due to the continued low-interest-rate environment and real estate regulations flow into the securities market, is expected to continue for the time being. The Bank of Korea lowered the base interest rate from 1.25% to 0.75% in March last year to stimulate the economy amid the spread of the novel coronavirus disease (COVID-19). It further cut the rate by 0.25 percentage points in May, bringing the base rate to a record low of 0.50%. The Bank of Korea stated in its '2021 Monetary and Credit Policy Operation Direction' announced on the 25th of last month that it would maintain the easing stance on the base interest rate.

The launch of mobile trading systems (MTS) by fintech (finance + technology) companies and the introduction of differentiated financial product sales channels are also likely to encourage individual investors to expand their trading activities. Kakao Pay Securities and Toss Securities plan to launch MTS in the market this year. They are expected to increase their market share by targeting individual investors based on Kakao Pay and Toss subscribers.

Meanwhile, on this day, the KOSPI soared to 3,027.16 at one point during the morning session, breaking through the 3,000 level for the first time in domestic stock market history.