(Photo = Getty Image Bank)
After the ‘Donghak Ants’ entered the domestic stock market around this time in 2020, they poured over 140 trillion won in two years. The results were shabby. Although the KOSPI index rose more than 50% during the same period, the average return of Donghak Ants was less than 2%.
The Korea Economic Daily, commissioned by Securities Company A on the 15th, analyzed the average return on domestic stocks of 2.17 million individual investors (April 1, 2020 to May 6, 2022) and found that it was only 1.9%. It means that he made only 190,000 won by spending 10 million won in two years. Although there are differences by brokerage company, it is estimated that the profits are generally similar.
During the same period, the KOSPI index rose 50.72% and the KOSDAQ index rose 55.22%. Even if the index rises by more than 50% for two years, the ants have not seen any ‘fun’. This is due to the fact that all stocks bought by individual investors (net purchases amounted to 141,383 billion won) were all dead. The stocks they bought the most were Samsung Electronics, Kakao Seegene, Hyundai Motors, Celltrion, SK Hynix, LG Chem, and Naver. Samsung Electronics, the No. 1 stock in net buying, fell 26.92% from its peak. The stock prices of five stocks, including Naver and Kakao, returned to pre-COVID-19 levels.
If the investment period was narrowed down to the past one year, it was found that the company suffered a large loss rather than a profit. It was found that the average annual return on investment in domestic stocks of 3.3 million accounts of securities company B (from May 1 of last year to April 30 of this year) was -13.5%. Considering that the index continued to decline this month, the loss rate is estimated to be greater.
Experts believe that following the market overheated, the losses of individual investors who entered late last year increased. Analysts say that the decline in growth stocks, which individual investors were enthusiastic regarding following the US central bank (Fed) tightening, increased, adversely affecting the returns of Donghak Ants.
There are many stocks that individuals bought, such as Shinpoong Pharmaceutical and Seegene, which have halved from their highs.
Leveraged ETF investment is also failing… “Fixing the index is God’s domain”
Why did the ‘Donghak Ants’ pour 140 trillion won into the domestic stock market for two years and did not make a profit? Experts blame individual investors’ belated entry into the stock market and their tendency to invest in growth stocks and theme stocks. Since January of last year, when Samsung Electronics, LG Electronics, etc. hit their historical peak, there have been many ants who have ‘entered the war’ belatedly, but it is analyzed that most of them did not enjoy it. The return of small investors who pursued the Corona 19 theme stock and aimed for the jackpot was only 0%. It was found that the investment loss rate of the ants on the ‘last car’ since May last year reached 13.5%.
Donghak Ants pouring 25 trillion won into the peak
It was in January last year that ants began to flock to stock investment in earnest. Monthly individual net purchases surged from 5.531 trillion won in April 2020, when the stock market started to rise, to 25.87 trillion won in January last year.
The problem is that in January of last year, when lumps of money from ants flowed in, the KOSPI soared to 3266.23 and reached an all-time high (3316.08). Most of the top-cap stocks, such as Samsung Electronics, Hyundai Motors, and LG Electronics, peaked at the time. Jung Myung-ji, head of the investment information team at Samsung Securities, explained, “There are many people who started investing in stocks belatedly following hearing the news that the stock market was booming and were bitten at a high point and forced to become long-term investors.”
Individuals who went ‘all-in’ on growth stocks hit a boomerang following the US central bank (Fed) tightened. From April 1, 2020 to May 6, 2022, among the top stocks with 2.17 million net buyers of large brokerage firm A, five growth stocks, including Kakao, Seegene, Celltrion, LG Chem, and Naver, fell by 50-60% from their peak.
It is pointed out that the focus on aggressive investments such as ‘KODEX leverage (2nd place in net buying)’ and ‘KODEX 200 futures inverse double (3rd place)’ was also a failure. Jung Yong-taek, chief economist at IBK Investment & Securities, said, “It is almost impossible to accurately predict the rise or fall point of the index, and the return would not have been that good because investing in leveraged products would inevitably lead to high trading frequency.”
If the time period is narrowed down to the past year when the stock market has fallen in earnest, the loss for individual investors is greater. The average annual return on domestic stocks of 3.3 million accounts of large brokerage company B (from May 1 of last year to April 30 of this year) was -13.5%. If you invested 100 million won, you lost 13.5 million won in one year. Analysts say that most of the top net buying stocks that Donghak Ant bought recorded negative returns, indicating that their assets are shrinking.
Ants at a crossroads
For the past two years, even for the same ant, the rate of return by investment size was markedly different. The average rate of return for those with an investment of 3 billion won or more was 8.7%, but the rate of return for small investors less than 1 million won was only 0.3%.
Many ‘corona 19 theme stocks’ such as Shinpoong Pharmaceutical, Seegene, and Jinwon Life Sciences belong to the top stocks that investors with less than 1 million won invested in net buying. The stocks are down 70-80% from their highs, respectively. While investing in Dunamu, our technology investment, which emerged as a ‘representative cryptocurrency theme stock’, was also cut in half.
On the other hand, those with assets of 3 billion won or more built their portfolios mainly on large blue-chip stocks such as SK Innovation, SK Hynix, and LG Electronics. Most of the stocks are maintaining a higher level than in 2020, even in a downtrend.
The MZ generation (millennials + generation Z) who entered the stock market in large numbers following Corona 19 also showed relatively sluggish returns. The average rate of return for those in their 20s and 30s was only 0.0% and 1.3%, respectively, but those in their 80s and over reached 4.4%.
The same is true for ‘Seohak Ants’ who bought overseas stocks, but did not enjoy the salty fun. Domestic investors have mainly bought Tesla, Apple, Nvidia, ‘ProShares Ultra Pro QQQ (ticker name TQQQ)’, and Amazon among overseas stocks over the past two years. Their average return was only 1.9%. This is the result of analyzing the return on investment in overseas stocks of 540,000 people over the same period by requesting a large brokerage company A.
In the stock market, observations are raised that the ants, who have been making aggressive investments for over two years, are at a crossroads. Although ants are buying at low prices with the possibility of a recent rebound in mind, there are evaluations that the investment engine is not the same as before. Kim Hak-gyun, head of the Shinyoung Securities Research Center, said, “The investment capacity of individual investors has reached a critical level.
By Shim Seong-mi/Seo Hyung-gyo, staff reporter smshim@hankyung.com
