Korea's Retail Traders Just Made a $1.6 Billion Bet Against the Crowd as KOSPI Sinks

Korean retail investors bought $1.6 billion in stocks on Monday. They took the opposite side of a trade foreigners and institutions were desperately trying to exit.

South Korea’s KOSPI index fell 2.70% on Sept. 28, closing at 6,889.75 after markets reopened from the Chuseok holiday. Foreign investors sold 3.23 trillion won ($2.4 billion), and institutions added 1.02 trillion won ($750 million) more.

Two Sides of the Same KOSPI Selloff

Foreign investors blamed a stronger US dollar and short-term doubt over Korea’s semiconductor sector. Institutions, led by financial investment, investment trust and pension funds, made a similar call and joined the selling.

Retail traders read the same headlines and reached the opposite conclusion. They treated Monday’s drop as a buying opportunity, not a warning, and became the KOSPI’s only net buyers of the day.

Their buying accelerated as the session wore on. Net retail purchases grew from roughly 145 billion won ($106 million) early in the day to 2.21 trillion won by the close, even as the KOSDAQ, Korea’s secondary board, closed slightly higher.

The “Ants” Have Done This Before

Korean individual investors carry a nickname, the ants, for banding together to buy into falling markets. The label dates back to 2020, when they absorbed a wave of foreign selling during the pandemic crash and were largely vindicated by the rebound that followed.

The pattern does not always end well. A leveraged exchange-traded fund (ETF) tracking SK hynix lost 45% of its value earlier this year, hitting retail investors who held it as a long-term bet rather than a short-term trade.

Samsung Electronics and SK hynix, the two stocks driving Monday’s decline, will offer an early test of which outcome plays out this time. Both fell more than 5%, extending swings that have already made KOSPI more volatile than Bitcoin this year.

If retail buyers picked a floor, Samsung and SK hynix should stabilize within days. The KOSPI could retest 7,000 quickly. If they didn’t, Monday’s foreign selling may only be the opening move, and Goldman’s target could look further away than it already does.