While listening to InfoMax Live on Friday today
Money flowing into SK Hynix and Samsung, and foreign investors' net selling over the past few months
And the 55 trillion won in pension funds that will soon be withdrawn
As I listened to these stories, I started wondering "Are there more funds that will flow into KOSPI?"
For some time now, foreigners have been withdrawing money unilaterally, institutions have been pushing for selling and buying, and pension funds have reached their limit and will soon need to withdraw 55 trillion won. In this situation, I'm wondering if it's even possible to prop up the market with only retail investors' money?
While they say stock deposits are at record levels, this isn't an endless spring. If stock prices keep swinging wildly like now and retail investors start dropping out and leaving, I wonder if there's anyone left to support stock prices?
When there was no leverage, Samsung and SK Hynix moved sideways, and during consolidation, money naturally flowed to other sectors, allowing foreigners, institutions, and retail investors to move in and out, creating a healthy circulation of funds. However,
Now as other sectors fall, people are selling declining sectors and money is concentrating into Samsung and SK Hynix stocks and leverage. With no positive circulation happening, stock prices are rising only on the backs of Samsung and SK Hynix.
Right now, it feels like foreigners, institutions, and retail investors are sitting down and gambling. It's about who will take whose money within a fixed capital pool to increase their share. But it's a game where unorganized retail investors are clearly going to lose, and I feel terror thinking that when the money being poured in dries up, these stock prices won't be sustainable.
It seems like pension funds not adjusting their holdings periodically and just leaving them alone has actually become a poison.
If they had adjusted periodically, stock prices wouldn't have risen this much, but as they went up, foreign rebalancing would have led to money outflows at reasonable levels, and I think a healthier market would have been maintained.
Because of the sharp rise without brakes, foreign rebalancing amounts have snowballed, and retail investors have been rushing in. This situation where they go all-in on leverage when prices drop has been continuing for a month, and from the perspective of the overall KOSPI market, it feels like we're heading toward the worst.
This is my personal view, so others may not agree, but
In the US, money is still flowing in through private equity funds, and global investors are pooling capital, so they can maintain current stock prices while inflating a bubble. But I think in our country, the market bubble itself will burst before the semiconductor rally even ends.
In my case, by mid-August, I plan to gradually liquidate all my domestic stocks, leave the Korean market, and gradually shift to the US market. I've been investing in the US market since 2023 and have experienced frustrations when it drops, making modest profits little by little. But since August last year when I started investing in the Korean market, I've come to realize that both US and Korean markets have so many variables and so much to think about.
After chewing over the various stories from experts today, different thoughts are crossing my mind. While they say it's not yet time to leave the market, I've decided that I've eaten my share here, and I think I need to prepare to leave now.
If my writing has made you uncomfortable instead, I apologize first. As I wrote down my thoughts, I ended up only talking about fear.
I wish all of you here successful investing and happiness always. Today was a brutal day with a market crash, but I wish you a warm weekend with your family.
