Retail investors in South Korea have net purchased more than 17 trillion won ($12.6 billion) worth of stocks on the KOSPI market this month amid heightened volatility driven by Middle East geopolitical tensions, marking the second-largest monthly net buying on record.
According to the Korea Exchange on the 15th, individual investors' net purchases on the securities market totaled 17.6133 trillion won so far this month, excluding ETFs, ETNs, and ELWs. Retail investors were net buyers on seven of the nine trading days this month.
The current record stands at 22.3384 trillion won set in January 2021, when the "Donghak Ant Movement" during the COVID-19 pandemic drew massive retail inflows. With approximately 12 trading days remaining in March, analysts suggest the current pace could break that record. The previous second-place figure of 11.1869 trillion won from March 2020 has already been significantly exceeded.
Market volatility surged this month as geopolitical tensions and rising oil prices followed U.S. and Israeli airstrikes on Iran. Foreign and institutional investors sold 13.2396 trillion won and 5.1279 trillion won respectively, with retail investors absorbing most of their selling pressure during index declines.
On the 3rd, when the KOSPI plunged 7.24% as foreigners net sold 5.1487 trillion won, individual investors net purchased 5.7974 trillion won in a single day. On the 9th, when the index fell 5.96%, retail investors bought 4.6242 trillion won while foreigners and institutions sold 3.1735 trillion won and 1.5441 trillion won respectively.
Retail funds concentrated mainly on large-cap stocks. From the 3rd to the 13th, Samsung Electronics topped individual net purchases with 7.9466 trillion won in inflows, followed by SK Hynix at 3.3501 trillion won. Hyundai Motor also ranked high with 1.9433 trillion won in inflows.
Stocks linked to Middle East risks also ranked among top purchases. Individuals bought 584.6 billion won of LIG Nex1 and 538.2 billion won of S-Oil, major defense and refining stocks expected to benefit from international developments.
Securities analysts note a shift in retail investment strategy. While individual investors previously tended to chase rallying stocks, they now repeatedly engage in value buying of large-caps during sharp index declines.
"Unlike during the COVID pandemic, this market is characterized by corporate earnings growth," said Ko Yeon-su, a researcher at Hana Securities. "With expectations for semiconductor earnings improvement growing, retail investors are buying based on fundamentals."
The key variable is that KOSPI volatility could increase further amid concerns over prolonged "Iran shock." Investor deposits, which represent sidelined capital, have declined somewhat as the Middle East conflict extends beyond two weeks. As of the 12th, investor deposits stood at 120.1461 trillion won, down approximately 8% from the record 132 trillion won on the 4th.
While sharp rebounds have followed one or two-day plunges so far, sustained high oil prices exceeding $100 per barrel could negatively impact corporate earnings and burden the market. Korea Investment & Securities projected that while the KOSPI has passed its worst phase, it is not yet in stable territory, with the index potentially falling to as low as 4,885 points.