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By Anna J. Park
Retail investors have failed to enjoy the boon of recent stock market rallies, as they turned out to have purchased trending stocks related to post-pandemic reopening and secondary batteries at their peak prices.
According to bourse operator Korea Exchange (KRX) on Monday, the monthly average rate of return for the 10 most-purchased stocks by retail investors stood at minus 2.46 percent in May. This contrasts with the KOSPI, the benchmark index of the Korean stock market, which rose by 3.02 percent in the past month.
The top 10 most-purchased stocks by retail investors in May on the KOSPI market included POSCO Holdings, LG Chem, LG Household & Health Care, NCSOFT, Doosan Enerbility, AmorePacific, Hanwha Solutions, E-mart, KT&G and Korea Zinc, in the order of the total amount of the monthly buying by retail investors. All of the 10 favored picks by individual investors logged a minus return in May, except Doosan Enerbility at 2.6 percent. AmorePacific and LG Household & Health Care were two of the most unprofitable stocks last month, logging returns of minus 7.25 percent and minus 6.28 percent respectively.
In contrast, foreign investors' picks showed a differentiated interest, focusing on semiconductors, automotives and IT powerhouses. Their top 10 most-purchased stocks were Samsung Electronics, SK hynix, Hyundai Motor, LG Electronics, Naver, Cosmo Advanced Materials, LG Energy Solution, Samsung SDI, Kia and Samsung Electro-Mechanics in the order of the total amount of their purchases.
Market analysts view that retail investors chose items that peaked in April, such as cosmetics and secondary batteries, setting themselves up to incur monthly losses in May.
"Major cosmetics stocks that soared earlier this year amid expectations on China's reopening logged a fall last month due to sluggish earnings in the first quarter as well as concerns over Korea-China relations," Han Yoo-jung, analyst at Hanwha Investment, said.
Another analyst pointed out that foreign investors focused on buying stocks related to the overall economic recovery, such as semiconductors, while showing a low level of interest in China's reopening.
"Foreign investors have since March continued their buying moves in IT, such as semiconductors, hardware and electronics," said Lee Jae-sun, analyst at Hyundai Motor Securities.
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