Stock Investment During COVID-19
Stock Investment During COVID-19
  • Reporter Park Eu-gene
  • 승인 2020.11.27 14:36
  • 댓글 0
이 기사를 공유합니다

▲Many millennials are interested in stock investment / Economy Chosun
▲Many millennials are interested in stock investment / Economy Chosun

 

Interest in stock investment has soared during the COVID-19 pandemic. Individual investors (also known as retail investors) in Korea are commonly referred to as “ants”, because they are usually inexperienced and invest small sums relative to institutional or foreign investors. The amount of new investment accounts, online customer assets, and stock trading activity of “ants” has increased due to COVID-19 across the securities industry. For example, the number of new online investment accounts created at Kiwoom Securities in the first half of 2020 is 1.44 million, an increase of 364% compared to that of the same period last year. 
Following the sudden fall in stock prices in March due to the COVID-19 pandemic, a multitude of retail investors bought stocks from large institutional or foreign investors, seeing an opportunity in the volatile stock market. This caused an uncommonly rapid recovery in stock prices. Media outlets have called this event the “Donghak Ant Movement”, named after the famous Donghak Peasant Revolution of 1894 in the Joseon Dynasty. 
In particular, even college students and, more broadly, youths of the 2030 generation (millennials in their twenties and thirties) who were previously uninterested in stocks are being drawn into investing. This year, 11,300 people applied for the university student investment competition held by Korea Investment & Securities Co., twice the number from last year. According to a survey targeting 25- to 39-year-old Koreans published by the Mirae Asset Investment and Pension Center in May, 42% of respondents said they became more interested in financial investment due to the COVID-19 pandemic. 
The reason they gave in the survey above was overwhelmingly due to “low interest rates” during the pandemic (78%), with another reason calling investment an “alternative to (rising) real estate values” (12%). The 2030 generation tends to invest directly, be tech-savvy, and be anxious about the difficult job market and economy after the pandemic.
Alarmingly, many millennial investors are investing dangerously. The money borrowed from securities companies for stock investment (credit balance) by those in their twenties surged by 40% compared to the end of last year, according to Economy Chosun. Stock trading for retail investors is a very risky endeavor that almost always fails—borrowing money could lead to financial ruin. Most experts, including Professor Bong-Gyu Jang (IME), do not support college students’ investment in individual stocks for increasing personal assets. Prof. Jang warned, “consistent performance in the stock market is difficult, even for a genius investor like Warren Buffett. Do not be misled by uninformed rumors into trying to gain a massive win.”
Then what is a good way to invest? Prof. Jang counsels, “if you have a surplus budget, you may invest a reasonable portion in collective insurance schemes (funds). The risk that retail investors can take on is much smaller than (collective) institutional investors. Collective investment already occurs around you, such as in the national pension.”
Prof. Jang also recommends investing small amounts in order to study the stock market. “The study of stocks, often called the ‘the flower of capitalism’, is crucial in a capitalist society,” he notes. Prof. Jang recommends studying financial accounting and investment theory “which holds important business and economic insights from the past hundreds of years for students wishing to gain a proper understanding of investment,” before reading books out on the market. These courses (IMEN203 and IMEN786 respectively, taught by Prof. Jang) are available for enrollment at POSTECH.


댓글삭제
삭제한 댓글은 다시 복구할 수 없습니다.
그래도 삭제하시겠습니까?
댓글 0
댓글쓰기
계정을 선택하시면 로그인·계정인증을 통해
댓글을 남기실 수 있습니다.