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Individuals rush for stocks amid virus' market volatility

All News 11:48 April 09, 2020

SEOUL, April 9 (Yonhap) -- Individual investors in South Korea have raked in a massive amount of local stocks since the country's first coronavirus outbreak in January, countering foreigners' selling mode, data showed Thursday.

Since the first confirmed case of COVID-19 on Jan. 20 to Thursday at 10:40 a.m., individuals bought a net 20.5 trillion won (US$16.9 billion) worth of local stocks.

In a sharp contrast, foreigners dumped a net 19.4 trillion won worth of local shares during the cited period, compared with institutions' net selling of 3.3 trillion won.

While foreigners have continued net selling for 25 straight sessions since March 5, individuals have been net buyers except for only two sessions.

The offsetting boxed the benchmark Korea Composite Stock Price Index (KOSPI) within the intraday band of 1,439.43-2,277.23 points.

Individuals rush for stocks amid virus' market volatility - 1

Individuals' buying mode largely stemmed from optimism that the virus-hit market has neared its bottom and will eventually rebound. In March, the Korea Exchange suspended trading twice amid the plunging index on the main bourse, fueling such hopes.

Individuals' net buying size in March stood at 11.2 trillion won, the largest since the bourse operator began tracking in 1999.

Individuals' buying streak in the crashing market has drawn curious eyes from market watchers. Individuals had shunned the local stock market in 2019 by offloading a net 11.8 trillion won.

Individuals rush for stocks amid virus' market volatility - 2

The small investors' stock rush is likely to continue down the road, as they are increasingly turning to margin loans for leverage.

According to the Korea Financial Investment Association, outstanding margin loans to retail investors came to 7.26 trillion won as of Tuesday, up 10.37 percent from a month ago.

Margin loans refer to those that retail investors take out from brokerage houses to invest in stocks. A rise in outstanding margin loans usually points to growing investor expectations for rising stock prices.

Individuals' stock rush also took place in the secondary KOSDAQ market.

From Jan. 20 to Thursday at 10:48 a.m., they purchased a net 3 trillion won worth of stocks.


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