The holding period of domestic investors in stocks has increased.
According to the financial investment industry on the 22nd, the average holding period of stocks listed on the KOSPI market last year was 6.5 months, and for those on the KOSDAQ market, it was 2.9 months. Considering that in 2021 the average holding periods for listed stocks on the KOSPI and KOSDAQ markets were 2.7 months and 1.1 months, respectively, this represents more than a twofold increase.
Until 2019, the stock holding period for domestic investors reached 6 to 10 months. However, after the outbreak of the COVID-19 pandemic, the number of individual investors surged, and the so-called 'Donghak ant movement' led to a boom in short-term investing. This indicates that the average stock holding period in 2021 was particularly short.
However, this alone cannot explain the increase in the average stock holding period. Fundamentally, the trend of shorter holding periods for stocks is a global phenomenon. The convenience of stock transactions through mobile trading systems (MTS) has increased, and leading stocks in the market are changing rapidly.
In the financial investment industry, the main reason cited for the increase in the average stock holding period among domestic investors was the sluggish performance of the domestic stock market. As stock prices fell, investors who entered the evaluation loss phase entered into what is described as 'forced long-term investing,' resulting in an extended average stock holding period.
Samsung Electronics is a representative example of the most widely held stock among domestic investors. According to the Korea Securities Depository, the number of stockholders of Samsung Electronics was 5.67 million as of the end of last year. The average purchase price for the 290,000 Samsung Electronics investors linked to the Naver Pay 'My Assets Service' is 66,962 won. Currently, they are experiencing a valuation loss of over 10% based on the current stock price.
The situation is not good for other stocks that domestic investors widely hold. As of the end of last year, Kakao had 1.69 million shareholders, with an estimated average valuation loss rate of around 50%. NAVER, with 910,000 shareholders, and LG Energy Solution, with 800,000 investors, are also facing average valuation loss rates exceeding 20%.
The performance of stocks with a large number of shareholders in the KOSDAQ market is also dismal. As of the end of last year, Ecopro BM and Ecopro had 550,000 and 440,000 shareholders, respectively. The average valuation loss rates for both stocks are around 50%. Kakao Games, held by 240,000 investors, is nearing a 70% average valuation loss rate.
The domestic stock market has shown an upward trend this year after experiencing severe sluggishness last year. However, the reality is that uncertainties abound, from the 'tariff war' led by U.S. President Donald Trump to the impeachment politics surrounding President Yoon Suk Yeol.
Will domestic investors be able to escape forced long-term investments this year? It seems clear that it is not a situation where one can simply state the textbook wisdom that the chances of success in long-term investing are high. Discussions about tax benefits for long-term stock holdings are ongoing, but it is regrettable that as of the 21st, less than 5% of all listed corporations have announced plans to enhance corporate value.