Ants' Choices Ahead of Chuseok Holiday... Buying Kakao, Selling Semiconductor and Steel Stocks

Kakao's Net Purchase Hits 1.3 Trillion Won... Including Kakao Bank, Net Purchase Exceeds 2 Trillion Won
Confident in Platform Industry Growth, Judging as 'Bottom Buying'
Sold Off POSCO, Samsung Electronics, SK Hynix, and Others

[Asia Economy Reporter Minwoo Lee] Ahead of the Chuseok holiday, individual investors purchased more than 2 trillion KRW worth of Kakao-related stocks. This contrasts with the domestic stock market leaders Samsung Electronics and SK Hynix, which were sold off by over 200 billion KRW each. Despite exposure to various regulations, investors judged that the growth potential of the platform industry remains strong and saw this as an opportune time to buy.

According to the Korea Exchange on the 17th, individual investors have net purchased Kakao shares worth 1.3757 trillion KRW so far this month until the previous day. This is the first time since last year that individual investors have bought more than 1 trillion KRW worth of Kakao shares in a single month. It is nearly double the monthly net purchase record of 719.8 billion KRW set in April. During the same period, individual investors also net purchased Kakao Bank shares worth 731.5 billion KRW. In total, they bought over 2 trillion KRW worth of Kakao-related stocks.

Although Kakao has been struggling with internal and external turmoil and its stock price has been sluggish, investors appear to have judged the growth potential of the platform industry and Kakao’s market dominance highly, leading to bottom-fishing purchases. Earlier, Kakao’s stock price began to plunge after criticism arose from the political sphere accusing it of excessive ‘corner market’ infringement, and government authorities tightened regulations on insurance service brokerage by fintech (financial technology) subsidiaries. The stock price, which traded in the 150,000 KRW range at the beginning of this month, fell more than 10% in a single day on the 8th, entering a downward trend. Kakao Bank’s stock price, which was around 88,000 KRW at the start of the month, also dropped about 24% to 67,100 KRW as of the previous day.

In response, Kakao announced on the 14th a social responsibility enhancement plan that included ▲ alleviating concerns over fare increases by Kakao Mobility ▲ withdrawing some services and establishing a mutual growth fund ▲ converting K Cube Holdings into a social enterprise. However, the stock price still fell to the 110,000 KRW range. As regulatory voices grew louder, securities firms lowered their target prices for the first time since April last year. This was based on the judgment that the political sphere, mindful of self-employed voters, might extend platform company regulation issues like those involving Kakao until the March presidential election next year.

However, individual investors seem to have bet on the growth potential of the platform industry. They believe that although regulatory issues will arise, the overall industry direction will remain valid. The net purchase of NAVER, one of the two major domestic platform companies, worth 509.4 billion KRW so far this month is interpreted in the same context. Samsung Securities researcher Donghwan Oh said, "The expansion of platform business models in mobility, fintech, and content sectors is a global trend, not just domestic, and platform regulations are being strengthened overseas due to resistance from existing operators. Nevertheless, the industrial paradigm shift is a trend of the times, and while government regulations may slow the growth speed of platform businesses, they cannot change the direction."

Additionally, individual investors mainly bought large-cap stocks that recently plunged, such as LG Chem (427.3 billion KRW) and NCSoft (301.5 billion KRW). LG Chem has fallen 5.3% over the past week (8th to 16th) due to consecutive recall issues. NCSoft dropped about 10.8% due to the poor performance of its new game Blade & Soul 2 and criticism over its accumulated excessive monetization model.

On the other hand, individual investors mainly sold large-cap stocks in traditional industries this month. The top net sold stock by individual investors was the steel leader ‘POSCO’ (418.5 billion KRW). The domestic stock market ‘big brothers’ Samsung Electronics (286.9 billion KRW) and SK Hynix (205.6 billion KRW) ranked 4th and 5th in net sales, respectively.