The KOSPI index broke through the 7,000 level to a record high, but some say the gap with what individual investors feel is large. As the rally remains concentrated in a "tilted market" focused on a few big semiconductor stocks such as Samsung Electronics and SK hynix, a sense of deprivation is growing among individual investors, who tend to hold more small- and mid-cap stocks, that they are not feeling returns.
As the KOSPI successively broke through 5,000 and 6,000 this year and showed an unprecedented uptrend, individual investors have been returning to the market belatedly. It is seen as driven strongly by "FOMO (fear of missing out)," the worry of being left out of a record rally.
The problem is that the inflowing funds are not spreading across the market but are piling into specific large caps. The No. 1 net-buy stock by individual investors this year was Samsung Electronics, with a total of 16.696 trillion won purchased. SK hynix also ranked near the top with net purchases of 6.6951 trillion won.
Of the total 1,099 trillion won that individuals bought on the main board this year, 279 trillion won (25.4%)—about a quarter—was concentrated in just two stocks, Samsung Electronics and SK hynix. The indicator confirms an acute "tilt" in which individual funds are crowding into a handful of stocks.
This trend is further widening the gap between the index and perceived returns. The KOSPI has set a record high, but gainers are extremely limited, and many stocks remain stuck in a range. In fact, on this day on the main board, only about 190 stocks rose, while about 690 fell.
As a result, some investors complain that "the perceived index is still around the 3,000 level." A college student, a person surnamed Lee, 24, said, "The index keeps rising, but the stocks I hold are not moving much, so the disconnect is big," and added, "In the end, it feels like only large caps went up, and I feel needlessly left out."
In many cases, the index surge is actually making people hesitate to invest. An office worker, a person surnamed Kim, 29, said, "It has become burdensome to invest just by looking at the index," and added, "I'm torn between chasing now or waiting for other stocks."
Listed corporations' results also show pronounced semiconductor concentration. Of the 122 trillion won in first-quarter consolidated operating profit by listed companies this year, Samsung Electronics and SK hynix accounted for about 77% (94.8431 trillion won), confirming a structure in which results are concentrated in a few companies.
The market-cap share of the two corporations on the main board is also increasing. Based on the closing price on the 4th, the combined share of Samsung Electronics (1,359.2598 trillion won) and SK hynix (1,031.2803 trillion won) in the total market cap of all KOSPI-listed companies (5,685.8042 trillion won) was tallied at 42.04%. That is up nearly 7% from 35.22% when the KOSPI was at the 4,200 level early this year.
Cho Jun-gi, an analyst at SK Securities, said, "While profit momentum in the domestic stock market is said to be good, excluding these two stocks, estimates for this year's and next year's operating profit on the KOSPI have been moving sideways for a long time," and added, "In estimates for total KOSPI operating profit for this year and next, Samsung Electronics and SK hynix account for nearly 70%, showing the market's very high dependence on semiconductors."
Such a tilted market is cited as a factor that could heighten future volatility. The higher the dependence on specific stocks, the more the entire index can swing if those stocks undergo a correction.
Experts emphasize that for the KOSPI uptrend to continue, flows must spread across stocks. Sector rotation and whether small- and mid-caps rebound are cited as key variables that will determine the market's path.
Lee Sang-yeon, an analyst at Shinyoung Securities, noted, "As much of the earnings optimism has already been priced in, in the short term it is necessary to consider the possibility of a correction due to profit-taking," and pointed out, "From a macro perspective, the burden remains that high oil prices and the resulting inflation pressures have not been fully resolved."