[Opinion] 1,807.85

The KOSPI index, 11 trading days after breaking the 1,700 level, passed the 1,800 mark and hit a new high of 1,807.85 yesterday.

The market is as hot as it has ever been, with 1% of buying orders for stocks over 100 million won. This is the result of increased participation by individual market makers. More than 8 trillion won flowed into stock-type funds in a month and a half. Women in their 50s are the major investors in the fund market of Gangnam, Seoul. Less concerned with the education of their children and with sufficient money and market-analysis abilities, they form a mighty group of investors.

According to a representative of an investment consultant company, the biggest source of energy is the investment funds flowing in from the real estate market. Investors who were trading in foreign funds and real estate last year to avoid the pressure of investing all their money into domestic real estate stuffed in several trillion won between April and June. “Since May, the real estate chaebols have been frequently asking us whether it is not too late to step into the stock market,” says a fund manager.

Meanwhile those who invested in the real estate market with borrowed money are turning green with jealousy, being unable to shift to the stock market due to lack of available money.

There are a number of basic changes welcomed by the stock market. First of all, stocks and funds now take up greater share of individual assets. Funds have grown from 8 trillion won three years ago to 60 trillion won. Secondly, long-term investment has increased in the past three years. Mirae Asset Chairman Park Hyeon-ju, a protagonist of long-term investment, says, “Investors have become capable of enduring passable fluctuations in the stock price.” The earning rate of six-year-old independence funds in the form of domestic stocks is around 600%. Early sellers might have earned good fortune, but not as good as those who waited long.

What will happen to the newcomers that have just entered the stock market? Many view that the rise will go on making room for newcomers to make profits. They point out that enterprises have been showing good records, that the “North Korea discount” has weakened, and that the Chinese stock price has skyrocketed, enabling the Korean stock price to rise further. But even in case stock prices turn downward, seemingly persuasive interpretations will flood out. Just as few anticipated the ongoing jump in stock prices two months ago, the prospects of stock prices can always turn out wrong.

Hong Gwon-hee, Editorial Writer, konihong@donga.com