'Ant' investors get jittery as Covid-19 cases tick up again

A board at Hana Bank in central Seoul shows Kospi closed 30.04 points or 1.23 percent lower compared to the previous day on Friday. [YONHAP]

Is the bull rally ending?

That’s the question retail investors started to raise as the number of new Covid-19 cases spiked over the weekend.

A 40-year-old who just started investing last month in hopes of riding the recent upswing is panicking.

“Should I buy if the market falls on Tuesday?” the investor asked.

“I just can’t wait until tomorrow,” she said while fiddling with her smartphone, which she uses for trading.

The Korean stock market was closed on Monday as it was the substitute holiday for the Liberation Day holiday, which was Saturday.

While the Kospi closed Friday 1.23 percent down, it rallied for the previous nine consecutive trading days, hitting new 2020 highs for eight of those day. It was the first time in more than two years that the Kospi was above 2,400.

Brokerages revised their forecasts. Hyundai Securities projected the Kospi to rise to 2,650, while Samsung Securities even projected the stock market to rise to 2,850.

Much of the hype was driven by retail investors.

Last week, retail investors net purchased 1.28 trillion won ($1.08 billion) worth of shares. Foreign and institutional investors net sold 332.5 billion won and 948.6 billion won worth of stocks, respectively.

Korean stocks were hit hard earlier this year as Covid-19 spread rapidly in Daegu. At the time, the number of confirmed cases started to surge, creating a panic in the market.

Cooling mechanisms such as circuit breakers and side cars unused in nearly a decade were activated. The Kospi, which was trading around 2,000, sharply fell to 1,457.64, the lowest in 11 years.

Over the weekend, the daily number of cases was the highest since March.

Since Saturday, 610 new cases have been reported. The number of cases could increase as people who may have been exposed are still being tested.

With the government reinstituting stricter guidelines, small shops and businesses could again suffer.

“I’m worried that people will be forced to work at home again,” said an office worker.

There have been growing expectations that the Korean economy would bounce back in the third quarter. But with number of cases rising, the economy could again slow down.

Some market experts are betting that even the recent resurgence of the pandemic may not have a huge impact. Kwon Myung-joon, a Samsung Securities analyst, said concerns of a Covid-19 resurgence may no longer be a factor that would drive down the stock market.

The analyst said while adjustments are expected, the volatility will be limited.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]