South Korean stock markets ended best-ever 2020 on Wednesday, all thanks to retail stock frenzy.

The benchmark Korea Composite Stock Price Index (Kospi) on Wednesday added 1.88 percent from the previous session to close at a historic high of 2,873.47, 30.8 percent higher from a year ago.

The tech-heavy Korea Securities Dealers Automated Quotation (Kosdaq) closed 1.15 percent higher at 968.42, the highest ever since the IT bubble in 2000.

Korean markets closed for the year on Wednesday.

The Kospi’s rally on Wednesday was led by foreign and institutional investors who net purchased 245.8 billion won ($226 million) and 195.9 billion won, respectively. Demand was high for electronics and service industry shares. Retail investors, on the other hand, net sold 491.6 billion won worth of shares on Wednesday.

But for the whole 2020, retail investors were the main driver of the Korean stock boom. Thanks to individual investors’ bullish and bold bets on both growth and value stocks, the Korean stock market has been able to set a flurry of new records despite the unprecedented coronavirus pandemic that has put most countries across the world under partial or full lockdown for several months until now.

Soon after the Covid-19 outbreak peaked early this year, the benchmark Kospi index plummeted to 1,457.64 on March 19 versus 2,175.17 on Jan. 2, the first trading day of the year. But retail investors who learned lessons from the previous two major financial crises where stocks always rebounded from the nadir after panic selloffs immediately turned aggressive in making bets on stocks, flocking to the stock market to pick up equities dumped by foreign and institutional investors and helping the Kospi top the 2,800 level for the first time in the market history.

Throughout the year, retail investors net purchased a record high of 47.5 trillion won worth of shares, up from 11.8 trillion won last year. Foreign investors, on the other hand, net sold 24.6 trillion won worth of shares due to the gloomy global economic outlook from the Covid-19 pandemic. Institutional investors also net sold 25.5 trillion won worth shares.

Retail investors’ most-loved stock was bellwether Samsung Electronics. They net bought 9.6 trillion won worth Samsung Electronics shares this year as well as 6.1 trillion won of Samsung Electronics’ preferred shares. Samsung Electronics’ market capitalization was swelled to 484 trillion won as of Dec. 30 from 333 trillion won a year ago.

Thanks to the individual investors’ stock frenzy, the total market value of the Korean main bourse as of closing on Wednesday also reached 1,981 trillion won, up 34.2 percent from 1,476 trillion won on the last day in 2019.

The market value of the secondary Kosdaq also jumped 59.8 percent to 386 trillion won over the same period.

Trading volume was also high this year.

According to Korea Exchange, daily trading volume averaged at 12.2 trillion won this year, up 144 percent from 5 trillion won last year.

The upbeat market heated up the country’s initial public offering (IPO) market.

Compared with Hanwha Systems’ 402.5 billion won IPO, the biggest IPO of last year, Big Hit Entertainment this year raised 962.6 billion won from its market debut, becoming the largest IPO of this year. Kakao Games and SK Biopharmaceuticals also made blockbuster debuts.

The country’s foreign exchange and bond markets had a choppy year this year.

The Korean currency ended 2020 at 1,086.30 won against a U.S. dollar on Wednesday, gaining 67.60 won from this year’s opening of 1,153.80 won. The won once plunged to 1,296.00 won in March when Covid-19 outbreaks peaked. After reversing its course later, the won accelerated strengthening in the last quarter of this year on revived appetite for risk assets and the weakening greenback against major currencies amid the U.S. government’s massive virus stimulus measures.

The 3-year treasury bond yield on Wednesday added 0.5 basis point (bp) from the previous session to end 2020 at 0.978 percent, the 5-year one up 0.8 bp at 1.335 percent, and the 10-year one up 1.5 bps at 1.713 percent. From the beginning of this year, the 3-year Korean bond yield plunged 34.9 bps and the 5-year down 10.6 bps. But the 10-year T-bond added 7.5 bps throughout the year. Bond yield and price move in opposite directions.

By Kim Gyu-sik, Kang Woo-seok, and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]