Retail investors in South Korea poured $1.6 billion into stocks on Monday, taking the opposite side of a trade that foreign entities and institutional funds were actively abandoning.
Following the reopening of markets after the Chuseok holiday on Sept. 28, South Korea’s KOSPI index dropped 2.70% to finish the session at 6,889.75. During the downturn, foreign investors offloaded 3.23 trillion won ($2.4 billion), while institutions contributed an additional 1.02 trillion won ($750 million) in sales.
Two Sides of the Same KOSPI Selloff
Foreign investors pointed to a surging US dollar and temporary uncertainty surrounding Korea’s chip industry as justifications for the selloff. Institutions—consisting of financial investment firms, investment trusts, and pension funds—arrived at the same outlook and participated in the liquidation.
Conversely, individual traders evaluated the identical market news and drew a different inference. Viewing the market pullback as a chance to buy rather than a red flag, they stood alone as the sole net buyers on the KOSPI.
Their accumulation picked up momentum as trading progressed. Net purchases by retail participants climbed from approximately 145 billion won ($106 million) in the morning session to finish at 2.21 trillion won by the closing bell, while the secondary KOSDAQ board managed a minor gain.
The “Ants” Have Done This Before
Individual investors in Korea are commonly referred to as “ants” due to their habit of uniting to scoop up equities during market slumps. This moniker originated in 2020 when they stepped in to absorb massive foreign sell-offs during the pandemic-induced crash, ultimately being proven right by the subsequent market recovery.
However, this strategy does not consistently yield positive results. Earlier this year, a leveraged exchange-traded fund (ETF) tied to SK hynix plunged 45%, heavily impacting retail traders who treated the instrument as a long-term holding instead of a short-term tactical play.
The primary catalysts for Monday’s drop—Samsung Electronics and SK hynix—will provide an early indication of which scenario will materialize this time. Both equities slid over 5%, compounding price swings that have recently pushed the volatility of the KOSPI above that of Bitcoin.
Should the retail buyers successfully identify the market bottom, both Samsung and SK hynix are expected to find their footing within a few days, potentially allowing the KOSPI to reclaim the 7,000 threshold swiftly. If they missed the mark, Monday’s exodus by foreign investors might merely represent the beginning, pushing Goldman’s projections even further out of reach.