Donghak Ants' Net Buying March, Easily 1 Trillion Won a Day... Stronger This Year
Expecting Smooth Reach to 3400... Goldman Sachs Forecasts 3700
[Asia Economy Reporter Lee Seon-ae] The Donghak Ant Movement, which began in March last year amid the spread of COVID-19, has seen individual investors purchase approximately 100 trillion won worth of stocks in the domestic market over the past year. The Donghak Ant Movement, which has written a new chapter in the capital market history including the KOSPI 3000 era, continues strong net buying this year, pioneering new paths for the KOSPI that have never been explored before.
According to the Korea Exchange on the 8th, from the first trading day in March last year when the Donghak Ant Movement started until March 5 this year, the net buying amount by individual investors totaled 97.5573 trillion won. Considering the recent momentum where individuals easily net buy over 1 trillion won daily while absorbing selling pressure from institutions and foreigners, surpassing 100 trillion won seems imminent. Compared to institutions’ net selling of 64.2711 trillion won and foreigners’ net selling of 27.7443 trillion won during the same period, it is clear that the Donghak Ant Movement has been the main driver of a new history in the domestic stock market.
Counting from the first trading day in January last year when COVID-19 fully emerged in the global market until March 5 this year, individual investors’ net buying has already exceeded 100 trillion won, reaching a total of 110.9546 trillion won. The stock most purchased by individuals over the year was South Korea’s flagship stock Samsung Electronics. They bought 20.5866 trillion won worth of Samsung Electronics shares and also net bought 7.7303 trillion won of Samsung Electronics preferred shares. This was followed by Hyundai Motor (3.7922 trillion won), Hyundai Mobis (1.9471 trillion won), Naver (1.9335 trillion won), and Kia Motors (1.8175 trillion won).
The net buying streak by individuals has been even stronger this year. Whenever the market shows corrections due to massive sell-offs by institutions and foreigners, individuals have defended the index by net buying in the trillion-won range. From the first trading day of this year until the 5th, individuals net bought over 1 trillion won on 18 out of 42 trading days. On February 26 alone, they purchased 4.1017 trillion won worth of stocks, and in March, they net bought 2.4267 trillion won on the 4th and 1.2803 trillion won on the 5th.
The ‘money move’ by individual investors toward the stock market is expected to continue, and the general consensus in the securities industry is that the KOSPI will head toward unprecedented numbers powered by the ‘strength of money.’ Choi Yoo-jun, a researcher at Shinhan Financial Investment, diagnosed, “Among individual investors, stocks are no longer seen as assets to be bought only at special moments but as essential assets. Their attitude toward the stock market has changed compared to the past, and this trend is expected to continue.” He predicted that the money move by individual investors will persist.
The relentless buying power of the Donghak Ants is the basis for the forecast that the current correction and sideways market will give way to a performance-driven market, with the KOSPI comfortably reaching 3400. Kim Ji-yoon, a researcher at Daishin Securities, said, “Judging by the 5-year average price-to-earnings ratio (PER), the current valuation burden is not as high as during the financial crisis, so there is room for the index to rise to at least 3300-3400 by the end of the year.” She added, “If there is an additional upward revision in earnings, surpassing 3400 is also possible.”
The view that the KOSPI has significant upside potential aligns with the outlook of high-net-worth individuals. Samsung Securities conducted a survey from January 11 to 22 targeting 863 individuals with assets over 1 billion won, and 405 respondents (46.9%) predicted the KOSPI would surpass 4000. Meanwhile, 312 respondents (36.2%) expected it to reach 3500.
Global investment bank Goldman Sachs has raised its year-end KOSPI forecast to 3700, up 500 points from the previous 3200. The main reason is the clear improvement in Korean companies’ earnings, considering the global economic recovery this year. Goldman Sachs raised its net profit forecast for Korean companies to 59%, 5 percentage points higher than the market consensus of 54%. It also expects the resumption of short selling will not significantly impact the stock price rally. Based on the cases of short selling resumption in 2009 and 2011, the market showed only a brief initial weakness before continuing its upward trend. Goldman Sachs raised the target PER for the KOSPI from 12.5 times to 13.1 times.
Meanwhile, according to FnGuide, the consensus operating profit forecast (average estimate) for 234 listed companies in Korea as of the 4th stands at 184.8606 trillion won, up 3.5% from 178.6166 trillion won at the end of last year. The securities industry expects operating profits of listed companies to surpass the record high of 177 trillion won set in 2018.
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