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Investors rush for stock funds amid market crash, hoping for rebound

Economy 09:51 March 16, 2020

SEOUL, March 16 (Yonhap) -- Investors injected more cash into equity funds as they expect a market rebound following volatility caused by the spreading coronavirus outbreak, data showed Monday.

According to data compiled by market tracker FnGuide, the average yield of 961 domestic stock investment funds with a net asset value of 1 billion won (US$821,000) or more grew 2.3 trillion won to 56.2 trillion won in the one-month period to Friday.

The monthly inflow is far larger than the net inflow of 1.4 trillion won in the last three months and 1.8 trillion won in the past 12-month period.

Investors rush for stock funds amid market crash, hoping for rebound - 1

The recent hike in the stock funds marks a stark contrast with the monthly average loss of 19.36 percent. The monthly average return for active funds stood at minus 17.63 percent, comparing with the index funds' minus 20.21 percent.

The largest 34.31 percent loss was incurred by a fund that tracks the KOSPI 200, the basket of 200 blue chip firms' shares listed on the main bourse. From Feb. 13 to March 13, the benchmark Korea Composite Stock Price Index (KOSPI) plunged as much as 20.67 percent amid fears that COVID-19 will severely undermine the already struggling global economy.

The ongoing stock funds fever has shown an increasing similarity with individual investors' aggressive appetite for stocks on hopes of a major rebound in stock prices.

However, brokerage experts warn that stock prices may stay low longer than they expect, as the impact of the pandemic is still subject to high levels of uncertainty.

From March 5-13, individual investors net bought about 4.78 trillion won worth of local stocks. During this period, the KOSPI and the secondary Kosdaq dropped 13.98 percent and 18.35 percent, respectively, incurring heavy losses.


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