One hundred days into the launch of the Lee Jae-myung administration, the KOSPI index has hit an all-time high and remained strong, while performance by investor type has shown wide gaps. Compared with the stocks net bought by institutions and foreigners, share price gains were relatively weak for stocks net bought by individuals. Among the stocks net bought by individuals, more cases posted a minus (-).
According to the Korea Exchange on the 11th, from 4th, when the Lee Jae-myung administration was launched, to the previous day, the KOSPI and KOSDAQ indexes rose 22.8% and 12.5%, respectively. Buoyed by the bull market, the average share price of 1,378 stocks net bought by individuals during the same period also rose 5.4%.
However, during the same period, the average share price increase for 1,105 stocks net bought by institutions was higher at 14%. Foreigners also outperformed individuals, with the prices of 1,351 net-bought stocks rising an average of 10.2%.
Narrowing the scope to the top 100 stocks by net buying size widened the gap further. While the top 100 stocks net bought by individuals rose an average of 10.9%, the average gains for the top 100 stocks net bought by foreigners and institutions were 37.9% and 32.3%, respectively.
Even among stocks whose prices retreated, many were those heavily bought by individuals. Of the top 100 stocks by individual net buying, 44 saw their prices fall. By the same measure, the figures were 10 for foreigners and 3 for institutions. Factors cited include individuals, unlike foreigners and institutions, actively buying small and mid-cap stocks and engaging more in the KOSDAQ market, where gains were relatively smaller than on the KOSPI.
Individual investors' tendency to invest aggressively in rising stocks appears to have affected their results. A look at returns based on the estimated average purchase price per stock for individuals (transaction amount ÷ trading volume) and the previous day's closing price shows that for the top 100 stocks by net buying, the estimated return was -4.4%, suggesting more investors are likely sitting on valuation losses.
NAVER, the stock most net bought by individuals since the launch of the Lee Jae-myung administration, is a prime example. NAVER's share price rose 24.53% over the past 100 days. However, individuals' estimated average purchase price was 245,015.5 won, and the estimated return based on the previous day's close was a sluggish -4.7%. The stock soared intraday to 295,000 won on Jun. 23, buoyed by the nomination of former NAVER chief Han Seong-suk as Minister of SMEs and Startups, then underwent more than two months of correction.
Kakao Pay likewise logged a 100-day share price gain of 40.29%, but with individuals' average purchase price at 73,124 won, the estimated return is a weak -27.4%. Kakao Pay's share price also halved to 53,100 won at the previous day's close after surging intraday to 114,000 won on Jun. 25 amid the stablecoin frenzy.
In addition, for names with large individual net buying such as Doosan Enerbility, Samsung SDI, HMM, and Hanwha Solutions, many investors appear to have bought at the peak and been stuck as prices whipsawed, considering individuals' average purchase prices.
Of course, there are stocks where individuals recorded strong performance. Peptron's share price rose 26.9% over the past 100 days, while the estimated return based on individuals' average purchase price was higher at 31.6%. Seers Technology and Sejin Heavy Industries posted estimated returns above 50%, while L&C BIO and APR were also estimated at over 20%.
As Korea's stock market has broken out of an undervalued range, optimistic outlooks continue. Global investment bank (IB) J.P. Morgan recently picked Korea as its top-preferred market among Asian countries excluding Japan.
However, with many variables such as the global economy, the U.S. Federal Reserve's rate cut path, and corporations' earnings growth, market attention is focusing on the Lee Jae-myung administration's capital market policies. After the tax reform plan was announced at the end of Jul., debates over the major shareholder threshold for capital gains tax on stock transfers and separate taxation of dividend income put the market under pressure and led to a correction. President Lee Jae-myung is scheduled to hold a news conference marking his 100th day in office today and announce related policies.