Since September last year, as the KOSPI bull market has been led by net buying from individual investors, analysts in the securities industry said on the 22nd that these individual investors are both "Donghak ants (individual investors who invest in domestic stocks) and Korean retail investors trading U.S. stocks (individual investors who invest in U.S. stocks)." In particular, they noted that expectations for rotation should be tempered except for sectors related to artificial intelligence (AI).
Hyundai Motor Securities analyzed that since September last year, individual net buying has been driving the KOSPI bull market.
Kim Jae-seung, a researcher at Hyundai Motor Securities, said, "Unlike in the past when foreign flows determined the direction of the KOSPI, while the KOSPI rose 184% from September last year, foreigners recorded net sales of 118 trillion won in the KOSPI market," adding, "While foreigners were selling domestic stocks, buying by individual investors filled the gap."
Since September last year, individuals have increased their domestic stock investments through domestic equity exchange-traded funds (ETFs). Since March this year, buying of individual stocks has also expanded.
In particular, the first to respond to the KOSPI bull market was net buying by individual investors of domestic equity ETFs. Hyundai Motor Securities said that, looking at investor shares of domestic equity ETF net buying since September last year, individual investors account for about 73.4%.
Also, when looking at the top 15 domestic equity ETFs by net buying by individual investors since September last year, they were concentrated in semiconductor TOP2, single-stock leverage, and the semiconductor sector.
Kim said, "In particular, after single-stock leveraged ETFs were launched, individual investors' net buying of single-stock ETFs surged," adding, "Individual investors account for 84.7% of net buying in single-stock ETFs."
The share of ETF trading value among individual investors is on the rise. Hyundai Motor Securities analyzed that, compared with trading value of individual KOSPI stocks by individual investors, ETF trading value is nearing the 50% range.
Analysts say the concentration on large caps and semiconductors through ETF investments by individual investors is reinforcing the neglect of KOSDAQ. Kim said, "The share of KOSDAQ trading value by individual investors, which was close to 90% in the 2010s, is now below 60%," adding, "As individual investors' investment vehicles shift from individual stocks to ETFs, interest in KOSDAQ is declining by that much."
In particular, since late February this year, individual investors have also been expanding their investments in individual stocks of Samsung Electronics and SK hynix.
Kim said, "Since late February this year, individual investors have been increasing their concentration in semiconductors by directly buying the KOSPI leaders Samsung Electronics and SK hynix," adding, "The increase in direct net buying of Samsung Electronics and SK hynix by individual investors is intensifying the tilt toward the leading stocks."
This is appearing along with the strength of memory semiconductors in global stock markets. However, as the strength of memory semiconductor stocks continues in global markets and performance in the U.S. stock market is weak except for some tech stocks, the expansion of individual investors' net buying of U.S. stocks appears to have paused.
In particular, the point at which the expansion of net buying of U.S. stocks stopped was around late February this year, which analysts say coincides with when individual investors began snapping up Samsung Electronics and SK hynix.
Kim said, "Individual investors who invest in the domestic stock market now are both Korean retail investors trading U.S. stocks and Donghak ants, and to that extent, individual investors' investments align with global themes," adding, "Given these characteristics, net buying by individuals in the domestic market will continue only in sectors that align with the global AI theme."
Kim added, "Individual investors can move across domestic and overseas markets, so the rotation of individual funds that came into the domestic market could be U.S. stocks rather than small and mid caps or KOSDAQ," noting, "This is why a concentrated AI-related portfolio should be maintained through the end of the bull market."