In addition to Tesla, Korean retail investors continue to hold large positions in overseas listed companies with high technology content. Including apple, Amazon, Microsoft, alpahabet, NVIDIA, Hengrui medicine all continued to be on the list.
(top investment by Korean retail investors as of August 28, source: KSD)
It is worth mentioning that Tesla itself is the beneficiary of the global retail user market stimulated by the epidemic. Considering that South Koreas LG is also one of Teslas most important battery suppliers, it is not difficult to understand the complex of Korean retail investors piling up this stock.
You Seung Min, chief strategist at Samsung Securities, said record low interest rates have encouraged South Korean investors to look beyond their earnings to overseas stocks. According to the Korea Institute of financial investment, the number of shares of overseas companies deposited with local brokers reached a record $40 billion this year.
But on a global scale, the phenomenon of retail investors clustering is often seen as a warning of large fluctuations in the companys share price. In July this year, in a short half day, 40000 Robinhood accounts increased their holdings of Tesla shares. On that day, the companys share price soared by 16%, and finally closed down by 3%.
Considering that the current retail positions in South Korea are close to 1% of Teslas total equity, Korean investors who are famous for their pursuit of risk and love to speculate in small cap stocks and high-risk derivatives are likely (and have the ability) to cause large fluctuations in the share prices of global electric vehicle leaders. Earlier, South Koreas financial regulatory authorities announced a ban on short selling of stocks, spurred by the huge risk appetite of new entrants.
Indeed, South Korean investors are more likely to pursue short-term returns and are likely to see them rush out if there are big market swings, youseung Min said.
As of press release, Tesla, which just completed the split today, rose 3.23% in pre session trading.
Source of this article: Wang Fengzhi, editor in charge of CFA_ NT2541