Chung Hyo-shik
The author is the social news editor at the JoongAng Ilbo.
Debate is intensifying in online stock communities over whether investors today show the “heart of a beast” or the recklessness of a moth drawn to flame. As markets swing sharply with developments in the Iran war, volatility has surged. Oil prices, exchange rates and interest rates are moving simultaneously, adding to uncertainty. Optimistic investors argue that the benchmark Kospi, which surpassed 6,000 on Feb. 25, will regain its upward momentum. More cautious voices warn that rushing into unpredictable conditions could lead to severe losses.
A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at a record-high 6,307.27, up 223.41 points, or 3.67 percent, on Feb. 26. [YONHAP]
The phrase “heart of a beast” refers to investors willing to bet boldly regardless of market direction, often seeking returns two or three times the movement of the index. The term traces back to John Maynard Keynes, who in “The General Theory of Employment, Interest and Money” (1936) described “animal spirits” as spontaneous optimism driving economic behavior beyond rational calculation. The concept is frequently used to explain risk-taking that defies conventional logic.
So far, market behavior suggests the bold camp has prevailed. According to the Korea Exchange, individual investors bought a net 26.3 trillion won ($18 billion) worth of Kospi stocks from March 1 to 24, offsetting foreign investors’ net selling of 22.3 trillion won. On the first trading day after the outbreak of the war, when the main bourse fell 7.24 percent, individuals purchased 5.8 trillion won. On Monday, when the index dropped 6.49 percent, they recorded a daily net purchase of 7 trillion won, the largest on record.
Funds have also flowed heavily into leveraged and inverse exchange-traded funds and notes, which aim to deliver returns two or three times the market’s movements. As of March 10, investment in such products had risen to 21.7 trillion won, up 75 percent from the end of last year. These instruments also magnify losses, exposing investors to significant risk.
Internal indicators are now flashing warning signs. Margin lending, in which investors borrow funds from brokerage firms to purchase stocks, exceeded 33 trillion won this month after reaching a record high of 33.7 trillion won on March 5. Forced liquidations of positions due to unpaid margin calls totaled 4.1 trillion won through Monday, nearly double February’s figure.
This reflects the spread of debt-driven investing across age groups, from those in their 20s and 30s to investors in their 50s and 60s. An analysis of 4.6 million retail accounts at two major securities firms showed that leveraged investors posted an average return of minus 19 percent from March 1 to 9, more than double the losses of those investing with their own funds, who lost 8.2 percent. Their performance also trailed the Kospi's 15.9 percent decline over the same period.
While stock markets may appear fair, they function as a “money game” in which differences in capital translate into gaps in information, diversification and the ability to withstand losses. Individual investors face structural disadvantages against institutions such as the National Pension Service, which manages about 300 trillion won in domestic equities.
During sustained rallies, most participants can profit. But in volatile or declining markets, gains for one side often come at the expense of another, turning trading into a zero-sum game.
Korea’s stock market is experiencing one of its strongest periods since the “Buy Korea” fund boom of 1999 following the 1997 Asian financial crisis. As of Wednesday, total market capitalization exceeded 4.5 quadrillion won, with 14.56 million stock investors nationwide.
Among them, a growing share of younger investors in their 20s and 30s and older investors over 60 have turned to leveraged investing, each accounting for roughly 20 percent and 30 percent of such activity, according to industry estimates. For many younger investors, frustration over widening wealth gaps—driven in part by soaring real estate prices—has fueled attempts to achieve rapid gains through debt-financed stock purchases.
Regulators have urged caution, warning against high-risk products and reminding investors that they bear full responsibility for their decisions. Yet the scale of participation suggests that these warnings may no longer be sufficient to curb risk-taking behavior.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
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