South Korea’s retail investor army declares war on short-sellers
Song Jung-a, 25 April 2021
Jung Eui-Jung, a former South Korean bank employee, recalls his bitter experience as a novice stock trader more than a decade ago, when he lost Won25m ($22,000) after the small metal group he invested in was delisted.
“It is the past that I want to forget. Back then, I didn’t have much access to information. I was bound to lose in an environment tilted against amateur traders,” said the 62-year-old head of the Korean Stockholders’ Alliance, an advocacy group that represents about 44,000 retail investors.
But the tables have turned over the past year as retail investors have emerged as the dominant force in South Korea’s $2tn stock market, accounting for almost 60 per cent of daily turnover. With that heft, amateur traders have become a political force, seeking to even the odds against professional investors.
Mom-and-pop investors bought a net Won63.9tn of Korean shares last year, compared with a net sale of Won5.5tn in 2019. That helped propel the benchmark Kospi index up 118 per cent following a coronavirus-driven sell-off last March, making it one of the best-performing markets globally.
Almost one-fifth of Korea’s population of 52m dabbles in stocks, and data showed local brokerages have amassed Won76tn in cash deposits.
“The market dynamic is changing fast with individual investors becoming a powerful force that even hedge funds should be afraid of,” said Albert Yong, managing director at Petra Capital Management, a Seoul-based investment firm.
