Although the KOSPI index rose 5.7% in Dec., individual investors are moving in the opposite direction. Even though they had been selling "double inverse (inverse 2x)" ETFs until last month, they are buying them back, betting on an index pullback.
According to Koscom ETF Check on the 10th, the ETF that individuals bought the most over the past week (Dec. 2–8) was KODEX 200 Futures Inverse 2X (double inverse). Despite this product posting an 11.63% loss, individual investors scooped up 165.3 billion won worth.
KODEX 200 Futures Inverse 2X tracks the daily return of the KOSPI 200 futures index at negative 2 times. In other words, it is a product that makes money when the index falls, meaning individuals are actively betting on a short-term correction.
In particular, buying of double inverse has been pronounced since Dec. Looking at the same product, individuals made a net purchase of 175.5 billion won from Dec. 1–9 (seven trading days). In contrast, they sold 220.7 billion won over the month of Nov.
After the KOSPI broke above 4,200 for the first time ever in early Nov. and then fell more than 7%, individuals said "the correction is over now" and dumped double inverse. But as it quickly recovered from the 3,920 level to the 4,150 level in Dec., they again said "it will fall again soon" and scooped up double inverse.
The securities industry is also split over the Dec. market. An optimistic view says there is a "characteristic of a bull market in that the waiting buy-side is solid," while a cautious view says "a volatile market will continue through year-end."
Kim Jong-min of Samsung Securities said of the KOSPI index this Dec., "The index is rising in the absence of special events," adding, "Unlike in a bear market, it proves a characteristic of a bull market in that the waiting buy-side is solid."
He added, "As the liquidity environment stabilizes and the artificial intelligence (AI) growth story continues to expand, a favorable environment is forming where we can expect a Santa rally."
Kim Dae-jun of Korea Investment & Securities said that as the U.S. Federal Reserve makes its benchmark rate decision early on the 11th, "If the Fed's move improves market conditions, the KOSPI index can rise further now."
By contrast, Noh Dong-gil of Shinhan Investment & Securities said, "The Dec. market is a period to prepare for the January earnings season rather than a year-end rally," adding, "Dec. is not a time to rally or take profits, but to realign portfolios around structurally growing sectors."