The phenomenon of large-cap stocks with market capitalizations of tens to hundreds of trillions of won turning into "meme stocks" overnight was heavily influenced by the massive inflow of household funds into the stock market. Compared with foreign or institutional funds, individual money has shorter investment cycles and trades more frequently.
According to the paper "Meme Investing and Retail Risk," published in the "Boston College Law Review," the expansion of inflows from individual investors leads, whether intentional or not, to "trading coordination." Even though countless individuals did not collude in advance, they consume similar information pouring out on the same platforms, such as YouTube, Telegram, and stock discussion boards, and as a result move in lockstep in one direction like a massive institutional investor.
Ultimately, when individual money pours into the stock market, "coordinated retail risk" can create a new form of risk for the market. Even large listed companies are exposed to volatility risk from "retail coordination," rather than the market's fundamentals.
In Korea's stock market, the inflow of household funds became pronounced after the new government pushed "stock market revitalization" policies last year. In particular, as the domestic market posted far higher returns than other global assets last year, the shift of household money gained more momentum.
An unprecedented rally and heavy media exposure stoked FOMO (fear of missing out) among those previously uninterested in stocks, accelerating the inflow of individual money into the market.
Not only surplus household funds but also retirement pensions quickly pivoted to the market. Since the "retirement pension in-kind transfer system," which allows transfers between financial firms without canceling pension accounts, was introduced in Oct. 2024, the amount of pension money that moved from banks and insurers to securities firms is estimated at about 2 trillion won.
In a rising market phase, individual investors are also sharply increasing margin trading. The balance of margin loans for buying stocks with funds borrowed from securities firms surpassed 30 trillion won for the first time on the — and has continued to rise alongside the index.
Of course, the "MoneyMove" into the stock market is a global phenomenon. According to the "Global Retail Investing Outlook" report that the World Economic Forum released last year with Boston Consulting Group and others, participation in capital markets by individual investors is expanding in the United States and major European countries, as well as in Asian countries such as China, Japan, India, and Singapore. Demand to grow assets by investing in stocks instead of bank deposits has become widespread.
The World Economic Forum analyzed that as the expense burden of investment platforms has fallen, accessibility for individual investors has increased, and the ability to easily obtain investment information using artificial intelligence (AI) has influenced this shift.
JP Morgan Chase, the largest U.S. investment bank, also analyzed that individuals' stock investing has increased markedly over the past 10 years. An analysis by JP Morgan of individual investing behavior over 10 years since 2015 found that inflows of individual money into the market surged from early 2024, when the U.S. Standard & Poor's (S&P) 500 hit a record high, to early 2025.
The age at which people start investing in stocks is also getting younger. According to the analysis, only 6% of people transferred funds from deposit accounts to investment accounts after age 22 in 2015, but in 2024 that ratio increased sixfold to 37%.
Notably, the number of individual investment accounts surged even though the overall savings rate was low during this period.
JP Morgan analyzed that declining housing purchasing power has changed asset allocation structures. In a situation not supported by income and savings growth, as soaring home prices made it harder to buy a house, stock investing emerged as the only "escape route" for asset growth.
As individuals' influence has grown in the stock market, short-term price volatility has increased further. According to an analysis by the Korea Capital Market Institute, individuals tend to view stock investing as a so-called "jackpot," perceiving stock transactions as a substitute for lottery tickets.
In the financial investment industry, attention is on the possibility that the distinct, high volatility prominent in the KOSDAQ market will spill over to the main board. An official at a major securities firm said, "The reason the KOSDAQ market swings so widely is because the share of individual investing is high," adding, "Recently, as a lot of individual money has flowed into the main board as well, large-cap stocks have a greater chance of showing sharp surges and plunges like KOSDAQ names."
☞ Meme stock: A portmanteau of "meme," meaning content that goes viral online, and stock. It refers to shares whose prices surge and plunge on the back of word-of-mouth among individual investors in online spaces such as social media.