> Part of the problem was regulators’ decision in late May to approve 16 single-stock leveraged ETFs tracking Samsung and SK Hynix, which have been blamed for amplifying moves in indices and individual stocks.
Baffling that this was approved, though less so if you don't assume the regulator has the general market participant's interests in mind
we watched them change the rules in the US to force indexers to provide exit liquidity for the spacex IPO blunder via your dad's 401k. capturing the regulators is just part of what finance does.
1. Korean equities have been undervalued in comparison to Asian peers for a couple decades.
2. A couple Asia targeted funds began hedging ASEAN, China, and India equity risk by purchasing Korean equities around 18-24 months ago.
3. This influx of capital along with South Korea's lack of regulation around retail investors led to many retail investors getting caught with their shirts off when larger funds began rebalancing.
> what changed in the last week that did not change in the last 6 months
IRR in the 20% range was hit by those large funds that began the KOPSI arbitrage 18 months ago.
---
There's a reason South Korea is still classified as an "emerging market" in most risk indices.
> nearly half of its 880,000 clients who bought Samsung shares were now sitting on losses, while nearly 70 per cent of its 408,000 investors in SK Hynix were also in the red.
> Margin debt, which hit a record Won38.6tn ($27bn) last month as investors borrowed to amplify bets, has dropped to Won33.2tn after a wave of forced liquidations during the recent rout.
It's up 30% year-to-date. It's even up 13% over the last six months.
The same is true for Samsung, except the numbers are even larger (in the green direction). Sure there must be people who screwed themselves in the short term, but this doesn't look like reasonably careful investors have anything to cry about as of right now.
Small retail investors comprise 66% of the market in SK. It's usually single unmarried people who make ridiculously big bets to try and get enough money to buy a house or get married. It's something to be pitied not hated.
From my very shallow understanding of the Korean market it's common to invest in high risk shares because a big win is the only way to afford a nice home. Financial nihilism, risk appetite etc. So it's far from only rich people.
But if an investment doesn't pan out, and your response is "My life's screwed", you couldn't afford the investment either. "high risk" is right in the name -- the win isn't guaranteed.
If you are in the unfortunate position of not being able to afford a nice home, live somewhere less nice and try to build savings so that some day your children can afford a nice home.
Now I'm on very thin ice and just based on youtube videos so if someone from South Korea reads this feel free to correct me.
As I understand it the order of things for men* in SK is 1) housing 2) marriage 3) children
No housing means no wife means no children to afford a nicer home. So, they're incentivised to take big risks.
But I'm going to step out of this minefield now with the hope of someone who actually knows things providing some information. It just seemed like the original comment didn't give enough weight to context.
*Women in SK are as I understand it fighting a whole other battle.
>But if you get caught stealing bread, and your response is "My life's screwed", you couldn't afford the risk either.
>If you are in the unfortunate position of not being able to afford bread, eat something less expensive and try to build savings so that some day your children can afford bread.
See how this works when you conveniently dismiss the effects of severe structural problems in society as evidence of poor financial literacy?
> Part of the problem was regulators’ decision in late May to approve 16 single-stock leveraged ETFs tracking Samsung and SK Hynix, which have been blamed for amplifying moves in indices and individual stocks.
Baffling that this was approved, though less so if you don't assume the regulator has the general market participant's interests in mind
we watched them change the rules in the US to force indexers to provide exit liquidity for the spacex IPO blunder via your dad's 401k. capturing the regulators is just part of what finance does.
- why is everyone suddenly selling
- what changed in the last week that did not change in the last 6 months?
> why is everyone suddenly selling
1. Korean equities have been undervalued in comparison to Asian peers for a couple decades.
2. A couple Asia targeted funds began hedging ASEAN, China, and India equity risk by purchasing Korean equities around 18-24 months ago.
3. This influx of capital along with South Korea's lack of regulation around retail investors led to many retail investors getting caught with their shirts off when larger funds began rebalancing.
> what changed in the last week that did not change in the last 6 months
IRR in the 20% range was hit by those large funds that began the KOPSI arbitrage 18 months ago.
---
There's a reason South Korea is still classified as an "emerging market" in most risk indices.
> nearly half of its 880,000 clients who bought Samsung shares were now sitting on losses, while nearly 70 per cent of its 408,000 investors in SK Hynix were also in the red.
> Margin debt, which hit a record Won38.6tn ($27bn) last month as investors borrowed to amplify bets, has dropped to Won33.2tn after a wave of forced liquidations during the recent rout.
Looks like there is a lot of leverage left.
How tightly regulated is investment margin lending in the US?
https://archive.ph/WBSCj
Gamblers shouldn't expect to win all the time.
Some seem to expect governments to save them, which worked in 2008.
Wasn't that the casino who were rescued.. anyway they were selling "bets" which they claimed were "safe'.
If 100 people play a parlor game which the ratings agency has given"80% chance of winning", and 70% lose money instead...
This article's comment section made me discover the hilarious "No crying in the casino" meme words, thanks.
>bursts
so it's bursting now?
Bursting??
They set off circuit breakers for KOSPI twice in two days.
No chart in the article, huh? Strange, that.
Kospi is up 72% year over year: https://www.google.com/finance/beta/quote/KOSPI:KRX?window=1...
It's up 30% year-to-date. It's even up 13% over the last six months.
The same is true for Samsung, except the numbers are even larger (in the green direction). Sure there must be people who screwed themselves in the short term, but this doesn't look like reasonably careful investors have anything to cry about as of right now.
Hyped Korean techbros went from “Let’s gooo!” to “Aww nooooooo!” faster than a StarCraft 2 match
faster than a zergling early base rush.
oh those poor rich people that lost a bet, I feel so sad for them :(
Small retail investors comprise 66% of the market in SK. It's usually single unmarried people who make ridiculously big bets to try and get enough money to buy a house or get married. It's something to be pitied not hated.
Okay yeah that's very sad. People being tricked / kind of forced to bet money they can't afford to lose is very shitty.
From my very shallow understanding of the Korean market it's common to invest in high risk shares because a big win is the only way to afford a nice home. Financial nihilism, risk appetite etc. So it's far from only rich people.
But if an investment doesn't pan out, and your response is "My life's screwed", you couldn't afford the investment either. "high risk" is right in the name -- the win isn't guaranteed.
If you are in the unfortunate position of not being able to afford a nice home, live somewhere less nice and try to build savings so that some day your children can afford a nice home.
Now I'm on very thin ice and just based on youtube videos so if someone from South Korea reads this feel free to correct me.
As I understand it the order of things for men* in SK is 1) housing 2) marriage 3) children
No housing means no wife means no children to afford a nicer home. So, they're incentivised to take big risks.
But I'm going to step out of this minefield now with the hope of someone who actually knows things providing some information. It just seemed like the original comment didn't give enough weight to context.
*Women in SK are as I understand it fighting a whole other battle.
>But if you get caught stealing bread, and your response is "My life's screwed", you couldn't afford the risk either.
>If you are in the unfortunate position of not being able to afford bread, eat something less expensive and try to build savings so that some day your children can afford bread.
See how this works when you conveniently dismiss the effects of severe structural problems in society as evidence of poor financial literacy?
These aren't rich people, this movement is almost entirely fueled by young people. Educate yourself more before thinking this is reddit.
Young people who can't afford the risk, and don't bother to understand that fact.
Well apparently they don't really have a choice and with this context it's less funny