South Korea investors rush back to stocks at record pace, betting on bounce

[SEOUL] South Korea is bracing for a recession as the coronavirus pandemic batters global trade and financial markets, but millions of retail investors are rushing back to the stock market, betting on a sharp bounce.

As the deepening economic impact from the respiratory diseased wiped out about a third of the value of the benchmark KOSPI, retail investors upped their deposits for equity investments by 53 per cent since mid-January to a record 41 trillion South Korean won (S$48.46 billion) as of Thursday, data from the Korea Financial Investment Association (KOFIA) shows.

"The surge in stock buying is massive. With the outbreak, investors expects little to take from the housing market for the next couple of years and are moving to stocks," Kwak Sang-jun, a private banker at Shinhan Investment said.

The rush to buy back into stock markets may come as a relief to President Moon Jae-in, who rolled out more than a dozen rounds of cooling measures to curb a home buying frenzy as Seoul's apartment prices surged 50 per cent since his inauguration in May 2017.

Private bankers say a series of curbs including tighter loan restrictions and heavier taxes have pushed investors away from the housing market.

"And a chunk of that deposits is waiting for the market to turn, so the rush has only half begun," Kwak said.

The number of active stock trading accounts with at least 100,000 won of deposits reached record high of 30.6 million as of Wednesday, KOFIA said, up 12 per cent from a year earlier.

Five brokerages told Reuters that a combined total of 790,000 new accounts for equities trading were opened in March.

At Samsung Securities alone, more than 100,000 new investors opened trading accounts in the past month, with at least 61 per cent of those having traded shares of Samsung Electronics.

Samsung Electronics, which became more approachable after its 50:1 stock split in May 2018, ended trading at 47,800 won per share on Thursday, down 24 per cent from the highest level of the year.

REUTERS