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Retail investors in net buying mode amid stock market rout

All News 09:10 March 12, 2020

SEOUL, March 12 (Yonhap) -- South Korean retail investors have remained in a net buying mode this year despite a sharp drop in local stock prices, data showed Thursday.

Individual investors have bought a net 14.3 trillion won (US$12 billion) worth of local stocks as of Wednesday this year, according to the data compiled by the Korea Exchange.

In contrast, foreign investors recorded 7.7 trillion won in net selling over the cited period, with domestic institutions' net selling reaching slightly over 8 trillion won.

Analysts said retail investors have been buying the dips this year in anticipation of a price rally amid profit-taking by offshore and institutional investors.

The trend has been marked since the first outbreak of the novel coronavirus in South Korea on Jan. 20.

Retail investors in net buying mode amid stock market rout - 1

Small investors' net buying totaled 12.6 trillion won between Jan. 20 and Wednesday. They bought a net 1.3 trillion won on Monday alone, the largest single day figure in nearly nine years.

Their prolonged net purchases came despite plunging stock prices sparked by the spread of COVID-19. The benchmark Korea Composite Stock Price Index (KOSPI) plunged 2.78 percent to 1,908.27 on Wednesday, the lowest level since Feb. 17, 2016.

Retail investors' buying binge, however, has failed to pay off. The average return of their 20 most-bought stocks, including top-cap Samsung Electronics Co., came to minus 21.8 percent between Jan. 20 and Wednesday, underperforming KOSPI's 15.2 percent drop.

Out of the total, 19 saw their prices fall over the cited period, with prices of Samsung, the most sought-after issue, sinking 15.1 percent. Another chip giant, SK hynix Inc., suffered a 13.6 percent drop, and South Korea's state-run utility Korea Electric Power Corp (KEPCO) tumbled 22.5 percent.

Analysts voiced concerns that unless stock prices pick up down the road, retail investors stand to lose big from their investments, which could come as a drag on the equity market.

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