Korean Retail Investors Bought the Dip Yesterday and Sold at a Loss Today, Failing to Hold the Bag, Resulting in a Two-Day Loss of 53 Trillion KRW in Market Capitalization

July 29th. According to South Korean media reports, the South Korean stock market has experienced two consecutive days of sharp decline. On July 28th, amid heavy selling pressure from foreign investors, South Korean retail investors counterintuitively bought more than 43 trillion Korean won to catch the falling knife. However, on the 29th, the market decline further intensified, with retail investors shifting to panic selling. In the morning of the 29th, they net sold 14.2 trillion Korean won, indicating that the earlier bargain-hunting funds had begun to exit to stop losses.

As of the morning of the 29th local time, the KOSPI fell by over 12%, and the KOSDAQ fell by over 8%, both triggering a circuit breaker for the first time in history. Samsung Electronics and SK Hynix plunged for two consecutive days, with a total market value evaporation of approximately 530 trillion Korean won. Samsung Electronics shrank by 257 trillion Korean won, while SK Hynix shrank by 273 trillion Korean won.

Citi estimates that leveraged ETFs held by South Korean retail investors have accumulated losses of about $38.7 billion (approximately 56.3 trillion Korean won). Meanwhile, the margin balance of South Korean investors has decreased by over 30 trillion Korean won from its peak, and the net buying of U.S. stocks by South Korean investors in July surged by about 5.7 times, indicating that funds are rapidly fleeing the Korean stock market and shifting towards overseas markets.