Why South Korea Is Falling Into the Boom of “National Stock Trading”

  For most ordinary people in South Korea, entering the market in a big way when the cold winter of the Korean economy is coming is doomed to a dismal end in this squid game.
  At the end of September this year, the South Korean Financial Services Commission announced the launch of a 10 trillion won stock market stabilization fund to support the Korean stock market on a large scale. At a time when the global financial market is in turmoil, South Korea is one of the earliest and most powerful countries to rescue the market.
  The reason why South Korea is at the forefront of the global market rescue is that on the one hand, South Korea’s “stock bond exchange” market has suffered triple killings, and the government needs to come forward to support it. The more realistic consideration is that South Korea has fallen into a wave of stock speculation by the whole people in recent years. If the stock market The collapse will have a huge impact on Korean society.
  There is no age limit for stock trading In
  recent years, the popularity of stock trading in South Korea has become more and more popular. In February of this year, the number of active stock accounts in South Korea exceeded 60 million, while the total population of South Korea is only about 51 million, and stock accounts have far exceeded the population. Although on the one hand, it is because the Korean stock market allows one person to have multiple households, but it also reflects the reality of the current Korean stock market for all people to a considerable extent.
  Although the Chinese are also keen on stock speculation, at least on the surface, they have always emphasized that “the stock market is risky, and you need to be cautious when entering the market”, and have set certain thresholds for stock investment. However, South Korea has no age limit for stock trading. Many minors and even primary school students have opened stock accounts. Schoolchildren can be seen at the shareholder meetings of some Korean companies. Among the shareholders of Samsung Electronics, there are more than 300,000 people. under the age of 20.
  The investment or speculative enthusiasm of Koreans is not only reflected in the Korean stock market, but also very active in the international market. Koreans can be seen in some popular international investment fields. In the past few years, many Koreans speculated on cryptocurrencies, especially LUNA coins. However, after the surge in LUNA coins, the value of LUNA coins eventually returned to zero, leaving many Koreans with nothing to lose. In addition to cryptocurrencies, Metaverse, Tesla, and last year’s American retail investors’ short-squeeze battle at GameStop, etc., as long as it is the most popular investment theme, Koreans will basically not be absent.
  Hope to change destiny through investment
  The reason why Koreans invest for all people largely reflects the idea that ordinary Korean people hope to change their destiny through investment, or they are helpless.
  No matter in terms of economic aggregate or per capita GDP, South Korea is a well-deserved developed country. South Korea’s total GDP ranks 10th in the world, and its per capita GDP is comparable to that of Western European countries. However, by the standards of developed countries, the gap between rich and poor in South Korea is very serious. The difference in per capita income between the top 10% rich people in South Korea and the bottom half of the population is 14 times, and the difference in Western European countries is about 7 times.
  There are many reasons for the gap between the rich and the poor in South Korea. South Korea’s chaebol system is one of the important reasons. For young people, working in a chaebol company in South Korea is very different from working in an ordinary small and medium-sized enterprise. However, Korean chaebol companies are basically only open to the three top universities in Korea (Seoul National University, Korea University, and Yonsei University). For most ordinary Koreans, it is even more difficult to enter the chaebol class through prestigious schools. .
  Because they can’t see hope by their own efforts, young Koreans can only fight for their fathers. In recent years, there has been a very popular “spoon class theory” in South Korea, which divides young and middle-aged people aged 20 to 39 into gold spoons, silver spoons, copper spoons and clay spoons according to their parents’ assets and income. If the assets of the parents reach 2 billion won or the annual income is 200 million won, it is a golden spoon. According to the exchange rate of 1 won to 0.005 yuan, it corresponds to assets of 10 million yuan and income of 1 million yuan respectively. The silver spoon is 1 billion won in assets and 100 million won in income, the copper spoon is 500 million won in assets and 55 million won in income, and the mud spoon is less than 50 million won in assets and 20 million won in income, corresponding to about 250,000 yuan Yuan and 100,000 Yuan.
  For those young people who were not born with gold and silver spoons in their mouths, it is difficult for them to compete with their fathers, and it is difficult to achieve a class leap through their own efforts. Therefore, they can only try to change their destiny through investment. Among the more than 60 million stock accounts in South Korea, more than 80% are retail investors, and more and more mud spoons are accelerating their entry into the Korean stock market.
  The epidemic boosts the wind of stock speculation
  After the outbreak of the epidemic at the beginning of 2020, the South Korean stock market once plummeted. The South Korean government introduced a series of rescue measures, including prohibiting short selling, etc. Korean investors aggressively bought bottoms, which led to a sharp rebound in the stock market. From March 2020 to June 2021, The South Korea Composite Index (KOSPI) doubled, making it one of the world’s best-performing markets. The wealth effect brought about by the stock market, in turn, attracts more Koreans to join, pushing the popularity of stock trading to a new height.
  However, the strength of South Korean stocks did not last long. In April 2021, South Korea lifted its ban on short selling, and after accumulating more than double its gains, the Korean stock market left enough room for short sellers to suppress. And more importantly, as the Fed began to raise interest rates, it brought a huge impact to the Korean economy.
  In order to cope with the pressure brought by the appreciation of the US dollar on the depreciation of the Korean won, to narrow the interest gap between the Korean won and the US dollar, and to combat the rising inflation in South Korea, South Korea has to follow the pace of US dollar interest rate hikes. Since this year, South Korea has implemented 5 consecutive This is the most frequent rate hike in South Korea’s history and the most aggressive rate hike.
  Rapid interest rate hikes have rapidly cooled South Korea’s property market and stock market. In the past few years, South Korea’s property market has been booming. Now the transaction volume of apartments in Seoul has plummeted by half, and prices have fallen for nine consecutive months, the largest decline in two years. The decline in the stock market has been even more pronounced, with the Korea Composite Index down more than 30% since peaking in June last year. Considering the reality that all Koreans are investing in stocks, South Korea had to announce a rescue of the market recently, start a 10 trillion won stock market stabilization fund, and consider re-prohibiting short selling in the stock market.
  The cold winter of the economy has brought a huge impact
  However , for the South Korean stock market, the biggest challenge is not the impact of the US dollar interest rate hike, but that South Korea may suffer more severely than many countries in this round of global recession risks .
  South Korea is an export-oriented country, known as the “global economic canary”, and is an important weathervane to measure the global economy. Hundreds of years ago, poisoning incidents often occurred when the British mined coal mines. In order to test whether the coal mine was poisonous, a canary was put in. If the canary died, it meant that the coal mine was poisonous. Therefore, South Korea, as an important export-oriented country, is the canary for testing the health of the global economy.
  As a canary, South Korea’s export indicators have sent strong warning signs. According to the recently released data, South Korea’s export growth rate in September hit a new low in more than two years, and there was a deficit of 3.77 billion US dollars. As the global economy faces increasing risks of recession, as an export-oriented economy, Korea’s external demand faces a huge risk of shrinking, and the challenges of the Korean economy have just begun.
  For the majority of ordinary people in South Korea, especially the mud spoon class, when the cold winter of the South Korean economy is coming, they are doomed to a dismal end in this squid game. Not just South Korea, but for most countries, ordinary people who hope to change their destiny through speculation actually have similar endings in the end.

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