Selected as an exchange,’Top 10 News of the Year in the Securities and Derivatives Market’
“The best in history of KOSPI,’Donghak ants’ prominence, competition stock fever…”
On the 24th, when the KOSPI index hit an all-time high, the stock index is displayed on the lobby display on the 1st floor of the Korea Exchange in Yeouido, Seoul. Provided by Korea Exchange
This year, the Korean stock market has fluctuated so much that it can be said from hell to heaven. In March, just after the Corona 19 incident, the KOSPI fell below the 1500 line and then rebounded successfully, and in December, it is looking at Hill 3000, crossing the 2800 line. In this regard, the buying trend of individual investors, known as’Donghak ants’, played a big part. The public offering stock fever was also a strong year. According to the’Top 10 News in the 2020 Securities and Derivatives Market’ released on the 27th after a survey conducted by the Korea Exchange for entry and exit reporters, the KOSPI record high, the rapid increase in individual investors, and the public offering stock fever ranked at the top. It was also a hot topic that the’Circuit Breakers’, which stopped stock trading for the first time in 19 years, was launched in March, when stock prices plummeted due to the corona crisis.
1. KOSPI record high
KOSPI, which plunged to 1457.64 on March 19th, recorded 2201.88 on July 15th, about four months later, exceeding the level at the end of last year. This was the result of the inflow of buying tax centered on individual investors and the global stimulus measures. In line with expectations for a global economic recovery and strong earnings forecasts for domestic companies, KOSPI recorded 2602.59 on November 23, a record high in 2 years and 10 months since January 29, 2018 (2598.19). The KOSPI recorded 2806.86, crossing the 2800 mark for the first time on the 24th, the day before Christmas, after breaking the record high since November. This uptrend was found to be the strongest among the representative stock indices of 20 major countries (G20). As of the 22nd, the closing price of the KOSPI (2733.68) rose 24.4% per year. The country’s leading index increase rate was 22.8% in Turkey, 21.0% in Argentina, 11.8% in Japan, 11.5% in India, 10.1% in China, and 5.2% in the US.
2. Increased participation in the stock market by individual investors (Donghak ant fever)
This year, individual investors recorded the largest net purchase ever, playing a pivotal role in the stock market breaking the corona 19 and breaking the record high. It gave birth to the new word’donghak ant’. Until the 22nd of this year, the net purchase amount of individual investors was KRW 65,4 trillion (KOSPI 47.9 trillion won, KOSDAQ 17.4 trillion won). This is 6 times the previous maximum of 10.9 trillion won in 2018 (KOSPI 7.0 trillion won, KOSDAQ 3.8 trillion won). As individual investors’ participation in the market increased, the average daily transaction amount in the stock market this year reached 22 trillion won (12.0 trillion won in KOSPI and 10.7 trillion won in KOSDAQ), double the previous maximum of 11 trillion won in 2018. The proportion of individuals in stock trading increased from 64.8% last year to 76.2%. Investor deposits, which are funds around the stock market, surged from 27 trillion won at the end of last year to 63 trillion won on the 22nd. Following this flow of direct investment, the original indirect investment product of domestic equity funds decreased from 68 trillion won to 54 trillion won at the end of last year.
3. Public offering stock subscription fever
As the stock price, which had plunged due to the corona crisis, rebounded rapidly and the stock prices of newly listed stocks showed good levels, large-scale investments in public offerings (IPO) flowed mainly from growth industries such as pharmaceuticals, bios, and games. The subscription margins of general investors for public offering stocks of SK Biopharm, Kakao Games, and Big Hit Entertainment, which were listed this year, amounted to 31 trillion won, 58 trillion won, and 58 trillion won, respectively. The competition rate for public offerings of 33 companies, including Iruda (3039.6 to 1) and Younglimwon Soft Lab (2493.0 to 1), recorded more than 1000 to 1.
4. KOSPI Circuit Breakers launched after 19 years due to concerns about Corona 19
The Kospi, which fell sharply from mid-February due to concerns about the corona pandemic (a pandemic), fell below the 2000 line to 1987.14 on February 28 and to 1457.64 on March 19. On March 13th and 19th, the KOSPI and KOSDAQ indices plunged more than 8% during the day, triggering the’Circuit Breakers’, which stopped trading in the stock market and stock-related futures and options markets for 20 minutes. It was 19 years after the September 11 terrorist attacks in 2001 that the Circuit Breakers were triggered in the securities market. In the KOSDAQ market, it has been an activation after 4 years since February 12, 2016.
5. Prohibit short selling of all stocks
As stock prices plummeted due to the spread of Corona 19 and market unrest amplified, a ban on short selling for all stocks was enforced from March 16. Along with this, market stabilization measures have been taken to ease the limit on the quantity of treasury stock purchase orders and to exclude the obligation to maintain the credit loan collateral ratio to curb counter trading. Measures such as the ban on short selling were scheduled to be implemented for six months in the first place, but were extended until March 15 next year in consideration of concerns about reproliferation of the corona. On December 9, an amendment to the Capital Markets Act, which included reforms to prevent illegal short selling, passed a plenary session of the National Assembly. It is a content that imposes fines and criminal penalties for illegal short selling, and obligates the details of the loan agreement to be kept for five years.
6. WTI crude oil futures leverage ETN widening gap
The gap between’West Texas crude’ (WTI) futures leveraged-listed securities (ETN) widened abnormally, and some stocks traded more than eight times higher than the theoretical price of the index. This was due to a sharp increase in demand for speculative speculation to bet on a rise in crude oil prices by buying YTIen, a crude oil futures leverage. International oil prices, which had been on a downtrend due to concerns about a sharp decline in global crude oil demand due to the spread of Corona 19, once had a negative (-) phenomenon. The price of WTI crude oil futures for May delivery traded on the New York Commercial Exchange (NYMEX) closed at minus $37.63 on April 20. Experts analyzed that this is because investors who were concerned about the cost of storing crude oil started selling at once.
7. KTX gold market price and transaction volume hit a record high
Due to abundant liquidity and increasing demand for safe assets, the price per gram of gold in the Korea Exchange (KRX) gold market hit a record high 19 times. Gold prices started to rise from the beginning of the year and reached 61,500 won on February 20, exceeding the previous high of 61,300 won (August 13, 2019), and rose to 8,100 won on July 28. As young investors in their 20s and 30s increase their participation in the gold market, the volume of transactions also reached a record high four times this year. The trading volume of the gold market on the Korea Exchange was 272.6 kg on January 8, exceeding the previous maximum of 267.7 kg (August 6, 2019), followed by July 27 (481.7 kg) and July 28 (516.2 kg), followed by August 12. It recorded 586.1kg per day (trading value of 42.71 billion won). Accordingly, the cumulative trading volume of the gold market on the Korea Exchange this year (January 2 to December 22) was 25.5 tons, 24 times larger than 1.1 tons in 2014, the first year of the gold market opening. The transaction value increased to 1,753.5 billion won, which is a triple level.
8. Announcement of direction for advancement of financial tax system
The government policy that attracted the most attention in the stock market this year was to advance the financial tax system. From 2023, the government decided to unify taxation of income generated from financial investment products by classifying all income from stock and bond transfer income, fund redemption and transfer income, derivative-linked securities and derivatives as financial investment income. . The transfer income of listed stocks of minority shareholders, which has been tax-free so far, is also converted to full taxation. Instead, the securities transaction tax was cut by 0.23% in 2021 and 2022 (including agricultural special tax) and 0.15% in 2023 to prevent an increase in total tax revenue. The basic deduction limit for financial investment income from listed stocks and funds investing in listed stocks is 50 million won, and the period of deduction for carry-over losses is set at 5 years. The original plan to expand the range of major shareholders subject to capital gains tax on listed stocks from 1 billion won to 300 million won from April next year was withdrawn, and the current plan was to remain at 1 billion won.
9. A surge in overseas stock investment by domestic investors
Following last year, the US stock market continued to rise and the direct investment fever of individual investors continued. As a result, foreign stock investment by domestic investors increased significantly, mainly in the US. Until November this year, the amount of payment for overseas stock investment in the Americas through the Korea Securities Depository was $149.9 billion, an increase of 441% compared to the same period last year ($27.7 billion). The world as a whole, including the Americas, increased 356% from $36.9 billion to $168.1 billion. The amount of foreign currency stocks stored through KFTC was $41.6 billion as of the end of November, up 188% from the end of last year ($14.4 billion).
10. K-New Deal Index Series Announced
On September 7th, the Korea Exchange launched the’KRX BBIG K-New Deal Index, which is composed of major stocks in the battery, bio, Internet, and game sectors, and 5 types including the secondary battery, bio, Internet, and game K-New Deal Index, which are respective industry indexes. Released the New Deal Index. These industries have been attracting market attention as future growth industries, and have been selected as key areas of the government’s New Deal policy, leading the stock market uptrend this year. As of the 22nd, this year’s increase rate was much higher than the KOSPI increase rate of 24.4%, with the New Deal index of 73.3%, rechargeable battery 95.2%, bio 70.8%, internet 67.5%, and games 45.3%. Five ETFs following the five New Deal Index series were listed on October 7th, and as of the 22nd, the total net assets reached 7311 billion won as investors continue to demand the product.
By Kim Young-bae, staff reporter [email protected]