A September Full of Adversities... Only Donghak Ants Can't Sleep

Individual Net Buying Leader Kakao Drops 22.9% This Month
Kakao Bank Falls 16.92%... Naver and NC Also Down 8.2%, 11.6%

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Individual investors, known as ‘Donghak Ants,’ are experiencing losses in the domestic stock market, which has been hit by a series of negative factors such as concerns over early tightening in the U.S., the bankruptcy risk of Evergrande Group, and government platform regulations.

According to the Korea Exchange on the 28th, the top stock purchased by individuals on a net basis this month until the previous day was Kakao, with purchases totaling 1.4535 trillion KRW. This was followed by KakaoBank (664.5 billion KRW), Naver (NAVER, 515.3 billion KRW), and NCSoft (340.8 billion KRW). The sharp decline in the corporate value of large-cap stocks due to negative factors such as government platform regulations is interpreted as prompting individual investors to buy at low prices.

However, the returns on these stocks have dropped significantly. Kakao fell 22.90% during this period, and KakaoBank declined 16.92%. Naver and NCSoft also recorded returns of -8.20% and -11.67%, respectively.

The problem is that when stocks that are rapidly falling are purchased on margin, the risk of forced liquidation is high. According to the Financial Supervisory Service, forced liquidation, where securities firms forcibly sell stocks if individuals fail to repay borrowed funds within the deadline after purchasing stocks on credit, doubled in one month from an average of 4.2 billion KRW per day in July to 8.48 billion KRW last month. Last month, despite the sharp decline in semiconductor-related stocks due to concerns over a ‘peak-out’ (passing the high point), individuals purchased Samsung Electronics the most (5.611 trillion KRW), and SK Hynix was also net purchased by about 1.4776 trillion KRW. NCSoft, which fell sharply due to Chinese game regulations, was also net purchased by 683.7 billion KRW.

Meanwhile, foreign investors net purchased Samsung Electronics worth 1.4814 trillion KRW, and institutional investors including pension funds bought Krafton the most (478.6 billion KRW). Samsung Electronics rose 1.30%, and Krafton, the top net purchase by institutions, increased 1.32%. Considering that the KOSPI return was -2.05% during the same period, foreign and institutional investors performed well.