South Korea has more than 2 stock accounts per capita, and the Korean stock market sees "foreign investors sell, retail investors add leverage to buy".

The South Korean stock market has recently repeatedly hit new highs, with the Korea Composite Stock Price Index nearly doubling year to date. However, on June 26, the Korea Composite Index saw a plunge of more than 8% at one point during the trading session, triggering the circuit breaker mechanism for the second time within the week. In just a week, the South Korean stock market went through two “roller-coaster” swings, drawing global market attention.

Data shows that the share of retail trading in South Korea is extremely high. As of June 24, the total number of domestic stock trading accounts in South Korea was 109 million, while South Korea’s total population is only just over 50 million. On average, each person holds more than two stock accounts, and a large amount of capital has flowed in through high-leverage ETFs. Last week, the Federal Reserve’s shift in monetary policy to a more hawkish stance directly weighed on the high-valuation technology sector.

A report released by JPMorgan shows that, so far this year, foreign capital has recorded net outflows of approximately $95 billion from the South Korean stock market. At the same time, retail investors have accumulated an annual-to-date net buy amount of about $80 billion, becoming the main force supporting the market. This pattern of “foreign capital sells, retail investors buy and add leverage” can easily trigger forced liquidations during market volatility, causing the pricing mechanism to partially malfunction. (CCTV Finance)