AI summary
Summary of article:
South Korea’s Kospi ETF fell amid chaos and selling pressure on AI stocks, falling below the 5,000 level shouted by Lee Jae-myung during the campaign, prompting complaints from retail investors following the government’s entry into the market.
south korea chairmanli zaiming
Earlier, driven by the AI wave, the Seoul Kospi index reached a new high of 9,114.55 points in June. However, the chaos in individual stock leveraged ETFs led to heavy selling pressure, doubts about the return of US AI spending, and potential resistance to data center construction following the US election. Under the influence of a series of negative news, the Kospi index fell 8.8% to 4,911.28 points on November 6, falling below the 5,000-point level shouted by Lee Jae-myung when he ran for the presidency. Later the fall reached 5.4% i.e. 5,093.40 points.
As a result, retail investors expressed their dissatisfaction on online stock forums and mocked Li Zeming’s previous promises to express their deep disappointment.
During his campaign, Lee Jae-myung promised to raise the Kospi to 5,000 points, almost double its level at the time, effectively linking the government’s credibility to stock market performance.
After coming to power in June last year, he made directing family wealth from real estate to the stock market one of his main policies. In addition to cracking down on mortgage lending, he also tried to take measures to curb speculation in the housing market and increase shareholder returns. Many retail investors said they followed the government’s call to shift funds from real estate to the stock market, and many even borrowed money to enter the market.
However, the stock market’s performance in the second half of this year is in sharp contrast to the trend in housing prices. The Kospi index has fallen more than 40% from its historic high as the rally in global technology stocks collapsed. As of the close on the 5th, the total stock market value has declined by approximately US$1.7 trillion. At the same time, housing prices in Seoul have risen for 91 consecutive weeks, setting a record for the longest consecutive rise.
Goo Jung-woo, a sociology professor at Sungkyunkwan University in Seoul, said: “The President (Lee Jae-myung) used to say very confidently not to put money in real estate and invest in stocks instead.” “But many people who followed this advice have now lost their money.”
Kim Min, a 40-year-old salary worker who lives in Seoul, said he decided to postpone buying a home earlier this year and invested 40 million won (US$29,500) in an ETF linked to the Kosdaq index. After about seven months, the investment had lost about 65%.
“Looking at the past, I think the government was crazy to promote this (stock market) rally,” he said. “If I got my money back, I would never trade Korean stocks again, absolutely not.”
Another impact of the recent decline in Korean stocks could be that retail investors may shy away from Korean stocks, making it more difficult for the government to achieve its goal of stemming capital outflows to support the Korean won. South Korean investors bought about $13 billion in U.S. stocks in the last four months through October and sold $1.7 billion in Korean stocks during the same period, the data showed.
Kang In-soo, an economics professor at Sukmyung Women’s University, said: “The government may aim to revive the stock market, but setting a specific number like 5,000 points or 8,000 points as a target may give people the wrong impression.” Now people may remember the Kospi index falling by more than 9,000 points, instead of the target of 5,000 points proposed by Lee Jae-myung during the election campaign.
