Retail investors are flocking to the stock market as South Korean shares, which had long been trading in a narrow range, nosedived due to the COVID-19 pandemic. The movement is called “Donghak Ants Uprising,” which earned its name after the Donghak uprising led by peasants in 1894.
These “Donghak Ants” firmly believe that once the pandemic is under control, stocks will go up and they can rake in money in a volatile market. They have been successful so far for the last few weeks, with KOSPI recovering to the 1,900 mark after plunging to the 1,400 mark. But there are also increasing number of investors, who suffered losses after investing in derivatives and theme stocks, and some voiced concerns about a second shock to the stock market.
Investors should keep in mind that there are adverse variables outside the country. Experts are warning of a possible second wave of COVID-19 and it is hard to predict how bad businesses will be affected by the pandemic later on. There is also growing volatility in the global financial market caused by oil prices. “A slow growth in stock prices is likely going forward as KOSPI has already recovered to a significant extent,” said Meritz Securities analyst Ha In-hwan.
Experts advise investors to invest in blue-chip stocks, which have strong fundamentals and a high potential for future growth, although the returns may not be high at the moment rather than aiming for short-term profits. “They say money move from hotheaded investors to patient investors during a bearish trend in stock market,” said KB Securities analyst Shin Dong-joon. “It is important that investors do not overreact to the fluctuations of stock prices.”