Retail investors, often referred to as 'ants' in South Korea, have been a crucial support for the stock market. During the COVID-19 pandemic, they drove the market as 'Donghak Ants' and led a rally over the past year. They also acted as a buffer against selling pressure from foreign investors. However, their investment enthusiasm is rapidly waning, largely due to a significant decline in the domestic stock market since June.
According to a comprehensive analysis of monthly data from major domestic brokerages including Meritz, Mirae Asset, Hana, and Hyundai Motor Securities, the average monthly trading volume per individual investor has dropped from 139.68 million won in June to 100.77 million won in July, 76.71 million won in August, and 60.10 million won in September. This marks a nearly 60% decrease from the June peak, with September's trading volume falling to less than half of that peak.
Not only has the trading volume decreased, but the frequency of trades has also declined. The average number of monthly orders per individual investor, calculated from data from three domestic brokerages, fell from 14.39 in June to 12.25 in September, a decrease of 14.9%. The drop in trading volume was significantly larger than the decline in the number of orders, indicating a contraction in both trading activity and the scale of transactions. The total number of trading customers across brokerages also fell from approximately 2.11 million in June to about 1.32 million in September, a decrease of 37.7%.
In the first half of the year, trading volumes generally showed an upward trend. The average monthly trading volume per individual investor decreased from 109.50 million won in January to 93.73 million won in February, then rebounded to 114.38 million won in March. Although it slightly decreased to 111.78 million won in April, it increased to 132.78 million won in May and 139.68 million won in June, representing a 27.6% increase compared to January. However, the trend reversed in July, leading to a rapid contraction of the trading volume that had expanded in the first half.
The decline in trading activity coincided with significant fluctuations in the stock market. In March and April, geopolitical tensions in the Middle East due to military conflicts involving the U.S., Israel, and Iran, along with soaring international oil prices, caused instability in the domestic stock market. In June and July, the weak performance of semiconductor stocks and related sectors further exacerbated market volatility. The number of 'sidecar' interventions in the KOSPI index increased from 10 in June to 15 in July, reflecting rapid price fluctuations.
The KOSPI index retreated significantly from its peak. It reached a closing high of 9114.55 on June 22 but fell to 6838.04 by the end of September. The KOSPI 200 Volatility Index (VKOSPI) surged to 96.94 on June 29 before dropping to 43.03 by the end of September. Despite the decline in volatility indicators, individual investors' trading volumes did not rebound, suggesting that market fluctuations alone do not fully explain the contraction in trading activity.
Choi Hyun-jae, head of the research center at Yuanta Securities, noted, "Trading was likely active when the market peaked in June. This indicates that trading volume tends to increase when the index rises." He added, "At that time, the rise in stock prices of Samsung Electronics and SK Hynix, along with the introduction of leveraged exchange-traded funds (ETFs), significantly boosted individual investor trading. Ultimately, improving market conditions are crucial for increasing trading activity."
* This article has been translated by AI.
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