In South Korea, an army of retail investors flock to YouTube for advice on stock trading

SEOUL, Oct.21 (Reuters) – Millions of South Koreans have taken to stock trading over the past year with their enthusiasm fueling a new market force – popular investment channels on YouTube.

Cho Seong-bin, a 27-year-old bank worker who spends about half of his monthly salary on stock trading, is a devotee. He uses his commute to work to watch SamproTV and other channels which offer daily briefings, discussions on stock picking strategies and even personalized investment advice from well-known market players.

“It takes less than an hour to watch some of these YouTube shows and often is enough to get the big picture of a particular issue or industry. It saves a lot more time than reading blogs or books, ”he said.

Do-it-yourself stock market strategies from YouTube channels have become the norm for many retail traders nationwide – a phenomenon that bankers say is particularly South Korean in its magnitude.

Cho says it’s working for him. It only started trading at the end of last year, but its 8% return so far this year beats a 5% increase in the benchmark Kospi (.KS11) and it does not feel the need to turn to traditional sources of financial advice or to put your money in mutual funds.

As stock markets around the world have seen increased interest from retailers as the pandemic gives people more time and motivation to seek financial security, the backlash in South Korea has been overwhelming.

Last year, the country saw a dramatic 49% increase in the number of people investing in domestic stocks to 9.14 million, or about 18% of the population, according to industry data.

At the root of that jump was the disillusionment in the housing market where many young people are now overpriced after a series of tax increases and mortgage restrictions.

Retail investors have now become the biggest force in the South Korean stock market. Their net purchases of $ 40 billion in 2020 helped the Kospi rocket rise by 31% – the highest performance of any G20 benchmark.

They also accounted for two-thirds of South Korea’s stock transactions in 2020 and held 28% of the market at the end of the year. By comparison, in neighboring Japan, retail investors accounted for 22.7% of transactions and held 16.8% of the market at the end of December.

NEW CHALLENGES

The South Korean army of retail investors has posed new challenges for traditional market players. While this has led to a searing demand for domestic IPOs, for example, it has also made pricing difficult.

“If you understate a deal, then day one retail investor demand means it’s skyrocketing and the company is unhappy because they think there’s money left on the table. If it’s too expensive based on the pent-up demand you see during the process, then the stock may crumble on day one, ”a Hong Kong-based banker said on condition of anonymity.

And with many retail investors preferring do-it-yourself strategies, the domestic mutual fund industry has also been largely left behind in the current stock boom.

Net investment in local mutual funds that invest primarily in stocks fell 11% to 77.7 trillion won ($ 66 billion) last year – the largest drop in a decade, according to sector data.

Channels like SamproTV and Shuka World on YouTube have several advantages over traditional commercial TV shows, one being more engagement for viewers who can ask questions in the comments section and hear the experts respond in real time on. the program.

SamproTV, which started in 2019 and now has 1.57 million subscribers, also notes that it can quickly offer content in addition to its early morning and two night programs.

“When there are drastic market movements or other content that needs to be dealt with urgently, we schedule an impromptu show,” said Kim Dong-hwan, the channel’s main host.

The channels are also taking advantage of the fact that analysts’ reports in South Korea are traditionally free. This means that retail investors generally do not see the need to turn to financial institutions for advice, while making it easier for analysts to offer their perspective on their issues.

South Korea’s financial watchdog has said it is closely monitoring the increase in YouTube channels for any market volatility the trend may cause, but there are no plans to regulate them.

“From a regulatory point of view, we decided to see this as freedom of speech rather than a form of commercial sale,” said an FSS official, adding that it was difficult to impose rules. where no money changes hands.

($ 1 = 1,182.0000 earned)

Reporting by Jihoon Lee and Cynthia Kim in Seoul and Scott Murdoch in Hong Kong; Additional reporting by Hideyuki Sano in Tokyo; Editing by Edwina Gibbs

Our Standards: Thomson Reuters Trust Principles.

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