Where to Begin
Individual investor sentiment has turned sluggish, causing a rapid decline in the influence of retail traders in South Korea's stock market. At the beginning of this year, individual investors absorbed foreign selling pressure, contributing nearly half of the total trading value. However, by July, their share of transactions had fallen to just over 30%. Some analysts believe that as funds waiting in the stock market also decrease, this shift is not merely a change in trading participants, but also signals that the "ammunition" (investment funds) of individual investors is running dry.
Why Only 10 ASX 200 Shares?
According to the Korea Exchange on the 3rd, in July, the trading value share of individual investors in the Korea Composite Stock Price Index (KOSPI) market stood at 31.58%. This marks a significant drop of 16.53 percentage points over seven months, compared to 48.11% in January. During the same period, the trading value share of foreign investors reached 37.91%, leading individual investors by 6.33 percentage points. In the total trading value of KOSPI, the share of individual investors has accelerated its decline this year, after falling from an average of 53.32% in 2024 to 45.74% last year. This change is occurring against a backdrop of a sharp contraction in the overall market trading value. The investor deposits (idle funds in securities accounts), seen as "bullets" for investors, decreased from 132.5992 trillion won in early June to 104.1354 trillion won at the end of last month, a reduction of nearly 30 trillion won.
As the scale of individual trading sharply declines, the influence of foreign investors in South Korea's stock market is strengthening. As of the end of July, the combined market capitalization of Samsung Electronics and SK Hynix accounted for 51.23% of the total KOSPI market capitalization. With the index highly concentrated in a few large-cap semiconductor stocks, if individual funds that previously absorbed foreign selling pressure also dry up, the overall trend of the South Korean stock market will inevitably be swayed by the direction of foreign cash and futures trading, leading to greater volatility. Recently, South Korea's financial regulatory authorities have strengthened oversight of single-stock leveraged products. Therefore, the market is watching how much of the individual funds that previously flowed into leveraged products will return to the spot market of South Korean stocks. South Korean securities firms predict that the trend of foreign capital inflows and retail investor outflows will persist for some time. Kim Jae-sung, an analyst at Hyundai Motor Securities, stated, "In the future, KOSPI is expected to show a modest upward trend, driven by net buying from foreign investors." He added, "Even if the market rebounds, selling pressure from individual investors seeking to exit the market may continue to appear."
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