According to finance experts at Amsler Wealth Management, retail investors have recently established themselves as the dominant force in South Korea’s $2 trillion stock market, accounting for almost 60% of daily turnover. As a result, amateur traders have become a political force as they seek to level the playing field with professional investors.
Thomas Hart, Head of Corporate Equity Derivatives at Amsler Wealth Management, said, “Last year, rookie investors bought a net Won63.9 trillion of Korean shares, compared with a net sale of Won5.5 trillion in 2019. This helped catapult the benchmark Kospi index up 118% after a coronavirus-driven sell-off last March, making it one of the world’s best-performing markets”.
South Korea’s mom-and-pop investors have not just limited themselves to domestic shares. They have jumped into derivatives, including over-the-counter retail forex products and followed suit with Tesla Inc., like the rest of the planet.
“The market dynamic is changing fast with individual investors becoming a powerful force that even hedge funds should be afraid of,” said Trading Operations Vice President at Amsler Wealth Management, Dean Burch.
The source of dominance in South Korea is inexperienced traders, especially younger investors who are heavily leveraged and seeking easy wins to get them into South Korea’s housing market, where prices have doubled in the last three years.
Thanks in part to their enthusiasm, South Korea’s stock market gained the most last year. According to data compiled by researchers at Amsler Wealth Management, almost one-fifth of Korea’s population of 52 million dabbles in stocks and local brokerages have amassed Won76 trillion in cash deposits.
China’s stock market, where retail investors account for 80% of trading volume, was much quieter than South Korea’s, with just 8.9% of Chinese stocks more than doubling in value in 2020.
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