KOSDAQ Turned into an 'Ant Graveyard', Individual Losses Snowballing

Analysis of Top Individual Net Purchases in the Last 3 Months
No Profitable Stocks Among Top 20 Net Purchases
Comparison with Institutional Investors Profiting from Entertainment and Bio Sectors

Over the past three months, the KOSDAQ index has fallen by 12%, and individual investors are experiencing losses on every stock they buy.

According to the financial investment industry on the 20th, individuals recorded a cumulative net purchase of 870 billion KRW in the KOSDAQ market over the past three months. They focused on buying stocks such as E&CELL, which was listed on the KOSDAQ market on August 23 with net purchases worth 126.4 billion KRW, as well as HLB, Cimes, M83, Jeryong Electric, and TDS Pharm.

E&CELL attracted attention as a cell and gene therapy (CGT) developer spun off from Samsung Seoul Hospital even before its listing. During the public offering subscription for general investors, 2.78 trillion KRW in deposits were poured in. After listing, the stock price surpassed 40,000 KRW due to the Samsung halo effect, rising more than 160% compared to the public offering price of 15,300 KRW. However, the stock price retreated as the Social Welfare Foundation Samsung Life Public Welfare Foundation sold part of its holdings. The current stock price has fallen below the public offering price. Considering the average net purchase price of individuals at 27,900 KRW, it appears that most purchases were made during the initial rapid rise in the stock price after listing. Since then, investors have been unable to exit during the price decline and are currently holding the stock with an unrealized loss rate of 50%.

The recent increase in newly listed companies has also affected individual investors' returns. Many investors who invested during the volatile first day of listing missed the opportunity to sell as stock prices plummeted. Among the top net purchase stocks over the past three months, Cimes, M83, TDS Pharm, Hankem, Lumir, Selbion, Iron Device, Clobot, YJ Link, and Wavevis are all newly listed companies that recently entered the KOSDAQ market.

As investment sentiment toward newly listed companies has cooled recently, the longer the holding period, the higher the loss rate. The net purchase volume of M83, which was listed on August 22, exceeds 60 billion KRW. Considering an unrealized loss rate of 62%, losses exceed 37 billion KRW. The unrealized loss rate of TDS Pharm, listed on the same day, reaches 65%.

Among the top 20 companies by net purchases by individuals, the company with the highest loss rate is Iron Device. On the day of its listing on September 23, Iron Device’s stock price rose to 18,370 KRW but then fell to 3,600 KRW. The average purchase price by individuals is 12,053 KRW, resulting in an unrealized loss rate of 70%. Most investors appear to have bought on the first day of listing and were unable to sell due to the sharp decline in stock price, increasing the scale of losses.

Many individual investors are also stuck after investing in large-cap stocks within the KOSDAQ market. Over the past three months, individuals purchased HLB stocks worth 90.7 billion KRW. The average purchase price was 79,119 KRW, which is more than 10% higher than the previous day’s closing price of 70,300 KRW. EcoPro BM also ranked among the top net purchase companies. Individuals net purchased 35.8 billion KRW worth of shares, but the stock price declined, resulting in an unrealized loss rate of 24%.

RigaChem Bio’s stock price has risen 13% compared to three months ago, but individuals are recording losses of about 5%. RigaChem Bio has been declining since reaching an all-time high on the 11th.

Unlike individuals who are recording losses on every stock they buy, institutional investors are making profits. Thanks to net purchases of JYP Entertainment, Lunit, YG Entertainment, SM, and Peptron, they are recording double-digit returns. The unrealized gain rate on Peptron, which was purchased for 49 billion KRW, reaches 44%.

A financial investment industry official explained, "While the KOSDAQ market is sluggish, individual investors’ losses are particularly large," adding, "Compared to institutional investors, individuals are less accustomed to loss cuts, so losses tend to increase in a bear market." He further noted, "In a bear market, averaging down by buying more shares to lower the average purchase price can be detrimental."