Will the ant army with information, organization, and funding power survive the downturn?

On the 5th, the KOSPI closed at 3120.63. It recovered the 3,100 line in one day after foreigners and institutional purchases. The picture is a dealing room at Hana Bank headquarters. [연합뉴스]

A researcher at a securities company, who appeared on a YouTube stock broadcast on the 3rd, mentioned a company called National Treasure Design while capturing the closing market conditions of the stock market. When looking at the stocks, he said that it is necessary to carefully look at the investment status of other corporations, and introduced it as a company that has a lot of stakes in famous overseas companies such as Apple, Tesla, and Nvidia. As soon as the stock market opened the next day, trade orders were rushing to the national treasure design. The stock price, which started at 21,250 won, jumped to 23,200 won in 20 minutes. Just what I mentioned on YouTube caught the attention of the ants.

Get item information from YouTube and SNS

It is a common occurrence in the stock market these days. When’Big Mouse’ in the online space explains a stock or new investment idea, individual investors take coordinates and gather firepower. Unlike fund managers who are bound by various regulations such as risk management, free individual investors move quickly. ‘Individuals are institutions and foreigners’ rice’ and’individual investors are grains of sand’ are old stories. The ant corps has changed from before by systematically moving in accordance with the tacit command and instruction of Big Mouse with expertise and representativeness in the online space and freely exchanging information. It has established itself as a force that cannot be ignored in the stock market, having a different organizational power and intelligence than in the past, as well as financial power.

In particular, the firepower of the ant army is surprising. According to the Korea Exchange, individual investors account for 60-80% of the total trading value of the securities market (KOSPI). In the first quarter of last year, it remained at 40-60%. However, as the number of individuals joining the investment procession through the novel coronavirus infection (Corona 19) situation increased, the transaction volume also surged. There are many days when the net purchase volume per day hits an all-time high by sweeping over 4 trillion won. It is a desperate and inevitable option for individuals who do not want to be pushed down as a’thunderbolt’ as house prices and stock prices soar in the ultra-low interest rate situation. Unlike in the past, the stock prices of domestic major companies such as Samsung Electronics, Hyundai Motors, and Naver, which have been invested heavily by individuals, rose more than 50% last year alone. As the real estate side also showed a tendency to attract funds to the stock market due to strengthening regulations, indicators such as the stock price-to-earnings ratio (PER) and the stock price-net asset ratio (PBR), which determine whether the stock price is overheated, have become useless. It is a so-called’bombing’ situation, but the claim that it is not a bubble is also insignificant.

Graphic = Reporter Park Chun-hwan [email protected]

Investment reference books for individual investors are YouTube related to securities and economy, social network service (SNS), and Internet bulletin boards. Learn from YouTube and blogs, and get stock information from social media. Internet bulletin boards are a forum for discussion and a space for emotional bonds. The number of subscribers to YouTube channels such as Shinimdang, Shuka World and Sampro TV exceeded 1 million thanks to the stock investment fever. The YouTube channel of John Lee Meritz Asset Management, the godfather of Donghak Ant, also has 340,000 subscribers. Unlike securities company reports and media reports that provide filtered information on social media, they are often raw. About 7,000 to 8000 new articles are posted on the DC Inside Stock Gallery. Five per minute. There is a lot of false and distorted information, but there is also a lot of information from experts.

Individuals who have the three beats of organizational power, information power, and funding power also advance to overseas stock markets without hesitation. So-called Seohak ants also invested heavily in American Game Stop, which has recently become a hot topic due to controversy over short selling. In the US stock community, Americans shouted’Young Cha Young Cha’ in Korean and prayed for a rise in stock prices. Tesla’s Elon Musk, who has been criticizing the hedge fund-centered short-selling force for a while, also cheered up Seohak ants by writing it as’stronk’ on Twitter. Professor Jeong Yoo-shin, who served as the CEO of Standard Chartered Securities and Korea Venture Investment, said, “The distribution of information is simplified with YouTube and SNS, and anyone can respond to changes in the market anytime, anywhere through mobile. It has been structurally changed.”

The Lehman Brothers incident in 2008 is also cited as the background for the solidarity of domestic and foreign individual investors. At that time, many people suffered from a plunge in stock prices and mass unemployment, but the financial authorities mobilized public funds to help Wall Street, the cause of the situation, to stabilize the system, creating a controversy over the Great Devil. It is said that distrust has sprung up in governments and institutions, and the so-called’stock market democratization’ public opinion has spread to the base. The case of GameStop, which even raised a hand for hedge funds, is similar as the stock price surged as individual investors flocked. When stock trading site Robin Hood restricts buying and selling of GameStop, the perception that the rules of the game are unfair amplified.

Domestic individual investors had similar experiences during the cryptocurrency investment craze four years ago. After the then-Minister of Justice Park Sang-sang, who was concerned about the market overheating, made a statement of “exchange closure” in January 2018, the market shook, increasing antipathy and distrust toward the authorities. Even in the controversy over the resumption of short selling, the financial authorities are subject to distrust. Kim Hak-gyun, head of Shinyoung Securities Research Center, said, “The reinforcement of individual organizational power thanks to SNS is a common phenomenon that appears not only in the stock market, but also in politics and society. It is a lot and is as sensitive to struggles as well as the yield.” Cho Dae-sik (44), an office worker who started investing in stocks to make up for the losses incurred by the collapse of the cryptocurrency price, criticized that “unnecessary interference from the authorities rather shocks the market and breaks the flow and instigates confusion.”

Potential betrayal and domino sale during downturn

Individual investors sympathize with this dissatisfaction and strengthen their solidarity centered on the Big Mouse who offers alternatives. It is to judge that the interests of the authorities are closer to institutions and foreigners than individuals. Prof. Yushin Jeong said, “The financial authorities should accept the change in power that they were not individuals when they were trading securities in the marketplace. In particular, they should abandon the view of controlling the market and focus on the ability to thin information that could disrupt the market. Insisted. Although individual investors have changed much from the past, individual investors can suffer the most damage if the capital market’s midnight/control system does not work properly or if a sharp decline market arrives. Individual investors have joined forces to create a bull market, but’betrayal’ can happen anytime between them. In particular, it is unclear how much the bonds of individuals will be maintained in situations of overheating or bombing. If someone sells quickly and exits, a sell march can follow like a domino. Gamestop’s stock price, which soared from $16 per share at the beginning of last month to $500 at the end of the month, plunged to $53 on the 4th (local time) in a successive sale offensive. Center head Kim Hak-gyun advised, “Individuals are liable to suffer large losses due to their lack of experience in the downturn cycle. They should refrain from debt or credit transactions and invest with extra money so that they can endure the coming down market.”

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Individuals buy 22 trillion after KOSPI 3100… Institutions and foreigners are offensive to sell

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The ant corps, which opened the KOSPI 3000 era, is seldom cooling off. Whenever bad news breaks out amid the controversy over overheating the stock market, the index fluctuates, but the ant corps is responding with a lot of money. The ant army has bought 24 trillion won worth of stocks only in the stock market this year. In particular, after surpassing the KOSPI 3100, it has bought over 21 trillion won. Both institutional and foreign investors recorded net sales. After the KOSPI crosses the 3200 line, the 3000 line collapses, and the momentum of the uptrend has slowed, and there is concern about the damage to the ants.

Net purchase size by KOSPI index

The momentum in the individual’s buying trend began in November last year, when the KOSPI recaptured 2600. It took only 9 trading days for the KOSPI to reach 2700, which recovered 2600. During this period, individuals net bought shares worth 2,3977 trillion won. In the 2700-2800 section, individuals net bought 3,647.7 billion won over 14 trading days. Individuals poured 3,664 billion won after the 2800 line and occupied the KOSPI 3000 Hill in just 7 trading days. The ant corps boasted its firepower to buy shares worth 9,109.8 billion won in 30 trading days, when the index rose 400 points from 2600 to 3000. It was 44% more than the annual net purchase of individuals in 2019 (6,307.5 billion won).

The scale of the game has changed since the KOSPI 3000. Donghak ants have gained confidence, and a large number of new investors are jumping in, and the daily transaction amount of KOSPI is exceeding 40 trillion won. Individuals net purchased stocks worth 22,215.9 billion won from the 11th of last month to the 4th of this month after the KOSPI recorded 3100. After recording 3200, it net bought 10,5154 billion won, and after 3100, 11,700 billion won.

Although strong personal buying was continued, the KOSPI was pushed out of the 3000 line on the 29th of last month due to an offensive to sell. As an action produces a reaction, institutions and foreigners are placing orders to sell in an individual’s purchase procession. Since the KOSPI recorded 3100, it has sold 21,831.5 billion won. Due to this effect, individuals recorded net purchases of more than twice that of the 2600~3000 section, but the yield fell. The rule of the stock market that the larger the fund size, the lower the yield is, is reflected in individual buying trends.

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Reporter Kim Yoo-kyung [email protected]