Nowhere else to turn

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Nowhere else to turn

Sohn Hae-yong
The author is a business news editor of the JoongAng Ilbo.

Stocks are the new fad among people in their 20s and 30s. The millennials and Gen Z-ers are leading the retail stock boom. Two-thirds of brokerage accounts newly opened this year are by people in that age group. A stock investment contest for college students drew more than 10,000 participants this year, more than double compared to last year. Internet sites popular with young people are brimming with stock advice. Stock investment clubs have become the most popular among campus activities. The total amount of stock trading by people in their 20s through margin accounts from 56 brokerage houses surged 133.8 percent from December last year. And people in their 30s saw a 71.6 percent increase. They all became investors — on borrowed money.
In the zero interest rate environment, bank savings cannot build wealth. The younger generation is bold in investing in high-risk and high-return products. This tech-savvy generation easily searches and learns information through YouTube or other social media channels. It is no problem for them to trade stocks on their smartphones.
But the new investment environment is not the only motive. A young generation who cannot find jobs or afford a decent house by saving from their earnings are pushed into the stock market — with all the risks it entails.
They are the first generation in Korea to become poorer than their parents. Decent-paying jobs for young recruits are decreasing. Those lucky enough to land a job are hired on a contract or temporary basis. As a result, they can hardly save up even after finding a job. The days are gone when savings for 20 years yielded 20 percent interest per annum as it did after 1976.
Real estate, which used to be a reliable asset builder, is out of reach for many. The older generation was able to afford to buy a residence by rigorous savings from earnings. But housing and rent prices have gone up much faster than salaries. The government’s real estate policy fueled the price rises, making them unreachable for the younger generation. Getting loans has also become harder. The young are also disadvantaged if they try to subscribe to new apartment offerings that prioritize seniority and people with bank accounts that are many years old. Stock trading has become their only hope for upward mobility and wealth building.
The young generation perceives the stock market as the only level playing field. A fancy family or diploma is not needed. In other words, you cannot find any type of discrimination here. Also, risks are the same regardless of the investor’s age or situation. If you choose the right stock and timing, you can make money. The market provides the only hope to the “hopeless” generation.
Their investments clearly contribute to the economy: the recovery of domestic demand and to corporations as well. The young may be making a reasonable economic choice considering their restricted choices. Still, the stock market, which is turning into an economic activity of last resort, can be dangerous.
The government encourages the investment boom among individuals. The government has extended a ban on short sales and eased our capital gains tax as stimuli measures after President Moon Jae-in cheered individual investors and the vitality they bring to the stock market. The government is happy to see money go away from the real estate market into the capital market, not to mention calm the diverting or distraction of deepening public disgruntlement over its real estate policy.
The Moon administration has doused the dreams of the young by dismantling their social mobility ladders. It has pushed them into the stock market. I hate to imagine the stock market overheating and the bubble bursting.
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