Individual investors flee Korean stocks as retail trading activity hits six-month low
Retail trading on the Kospi has fallen sharply as volatility, concentrated chip exposure and mounting losses push individual investors out of the market.
An electronic board displays the Kospi and other market indexes in the dealing room of Hana Bank headquarters in Jung District, central Seoul, on Aug. 4.
NEWS1
Retail investors are rapidly pulling out of Korea's stock market as extreme volatility dampens investor sentiment, according to the Korea Exchange on Tuesday.
Retail investors accounted for about 31.2 to 31.5 percent of trading value on the Kospi in July, down sharply from 48.1 percent in January. The figure has fallen by roughly 16 to 17 percentage points in just six months.
Even the slightest rebound in the index is triggering selling, said the securities operator, as investors rush to recover their principal and exit, accelerating the exodus from the domestic market.
Retail investors also lost their position as the market's dominant trading force since June. In July, foreign investors accounted for about 38 to 39 percent of Kospi trading value, comfortably surpassing retail participation.
Cash waiting to be invested has consequently shrunk sharply. Investor deposits, a gauge of funds on the sidelines, fell from around 130 trillion to 139 trillion won ($91 billion to $97 billion) in early June to 104.1 trillion won by the end of July — a decline of more than 30 trillion won in two months.
Analysts point to the Kospi's heavy dependence on market bellwethers Samsung Electronics and SK hynix as a key reason individual investors are turning away from the market.
The two semiconductor giants account for more than half the Kospi's total market capitalization, making the broader market highly sensitive to their share price movements. The concentration has fueled sharp swings, including repeated trading halts and rapid rebounds, increasing uncertainty for investors.
The single-stock leveraged exchange-traded funds tracking Samsung Electronics and SK hynix, launched last May, drew a rush of retail money — but within just a month, some investors saw losses topping 40 percent.
As losses mounted, many individual investors shifted their money into U.S.-listed leveraged semiconductor products instead.
With retail losses deepening and market instability persisting, financial authorities have tightened regulations on single-stock leveraged products, including raising minimum deposit requirements for investors.
BY KO SEUNG-PYO [[email protected]]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
