An Individual Collecting Gobus... 'Grinning' Amid Stock Market Decline

KOSPI Shows Decline After 5 Trading Days
Individuals Net Buy 328.4 Billion KRW in Gopbus This Month
Meanwhile, Institutions Invest in Leverage

The KOSPI showed a decline for the first time in five trading days, leading to mixed fortunes for individual investors betting on a market downturn and institutions relying on a market rise.

As of 10 a.m. on the 17th, the KOSPI stood at 3,254.82, down 23.86 points (0.73%). On the 16th (local time), the Federal Open Market Committee (FOMC), which sets U.S. monetary policy, raised the possibility of an interest rate hike, pulling the index down. This was also interpreted as fatigue after three consecutive days of record highs.

At the FOMC, the majority of members expressed views that the timing of the base rate hike could be moved forward. Following this outlook announcement, the U.S. 10-year Treasury yield surged from the 1.4% range to 1.559%. Gold prices plunged by 2%. An interest rate hike reduces liquidity and diminishes the appeal of risk assets such as stocks. In fact, the Dow Jones Industrial Average fell 0.8% after this news was released.

As the likelihood of the KOSPI's upward trend breaking increased, individual investors betting on a market decline found themselves needing to manage their expressions. Since the beginning of this month, individuals have poured 328.4 billion KRW into inverse leveraged ETFs that yield double profits when the market falls (KODEX 200 Futures Inverse 2X). Even during the three days when the market hit record highs until the 16th, they net purchased 129 billion KRW, the highest level since the 3rd.

On the other hand, institutions investing in leveraged products that yield returns similar to the market's rise experienced a bitter taste. Since the KOSPI began rising on the 10th, institutions have net purchased leveraged ETFs (KODEX Leverage) every day except the 14th, totaling 130.5 billion KRW. This month, they have net purchased 144 billion KRW.

Seo Sang-young, a researcher at Mirae Asset Securities Media Content Division, forecasted, "On this day, the market is likely to see profit-taking selling pressure, but the decline will be limited mainly to stocks with high expectations for earnings improvement."