Korean retail investors purchased $1.6 billion worth of equities on Monday, stepping in to take the other side of a trade that foreign entities and institutions were aggressively unloading.
Following the reopening of markets after the Chuseok holiday, South Korea’s KOSPI index dropped 2.70% on Sept. 28 to close at 6,889.75. During the session, foreign investors offloaded 3.23 trillion won ($2.4 billion), while institutions dumped an additional 1.02 trillion won ($750 million).
Two Sides of the Same KOSPI Selloff
Foreign market participants pointed to a rising US dollar and temporary uncertainty surrounding South Korea’s semiconductor industry as reasons for the selloff. Institutions—comprising financial investment, investment trust, and pension funds—arrived at the same perspective and followed suit with their own sales.
Conversely, retail traders evaluated the exact same news and arrived at a completely different viewpoint. Viewing the market downturn as an attractive entry point rather than a red flag, they emerged as the sole net buyers on the KOSPI for the day.
Their accumulation picked up momentum as trading progressed. Net retail buying surged from approximately 145 billion won ($106 million) in the morning session to 2.21 trillion won by the closing bell, even while the secondary board, the KOSDAQ, managed a modest gain.
The “Ants” Have Done This Before
Individual retail investors in South Korea are frequently referred to as “ants” because of their tendency to unite and buy up equities during market slumps. This moniker originated in 2020 when they stepped up to absorb massive foreign liquidations amid the pandemic crash, ultimately being proven largely correct by the subsequent market recovery.
However, this strategy does not always yield positive results. Earlier this year, a leveraged exchange-traded fund (ETF) tied to SK hynix plunged 45%, heavily impacting retail traders who treated the instrument as a long-term investment instead of a short-term trading vehicle.
Samsung Electronics and SK hynix—the primary equities fueling Monday’s downward slide—will serve as an immediate indicator of how this current bet turns out. Both shares dropped over 5%, compounding price fluctuations that have recently caused the KOSPI to exhibit higher volatility than Bitcoin.
Should the retail investors have successfully identified the market bottom, Samsung and SK hynix ought to level off within a matter of days, potentially allowing the KOSPI to make a swift return toward the 7,000 threshold. On the other hand, if they missed the mark, the heavy foreign selling seen on Monday might simply be the start, making Goldman’s target appear even more distant.
Frequently Asked Questions
Why did South Korea’s KOSPI index fall on Sept. 28?
The KOSPI index fell 2.70% to close at 6,889.75 as foreign investors and institutions dumped shares following the Chuseok holiday, driven by a stronger US dollar and short-term doubts regarding the domestic semiconductor sector.
How much did Korean retail investors buy during the selloff?
Korean retail investors bought $1.6 billion (2.21 trillion won) worth of stocks by the close of the trading session.
Why are Korean retail investors called “ants”?
They are nicknamed “ants” because they are known for banding together to purchase stocks during falling markets, a behavior that gained prominence during the 2020 pandemic crash.
Which stocks drove Monday’s decline?
Samsung Electronics and SK hynix were the two stocks driving Monday’s decline, both falling by more than 5%.
