The South Korean "Ants" bring the KOSPI to new Highs

South Korea's benchmark index continues its ascent, hitting new highs at the start of the week. This rally is fueled by the surge of Samsung Electronics and SK Hynix in the AI memory market, as well as the growing appetite of local retail investors, nicknamed the "ants."

Less than a year ago, the South Korean stock market appeared relatively stagnant, with few catalysts capable of sustaining long-term bullish momentum. In this context, many South Korean retail investors prefered to invest foreign markets - and particularly Wall Street.

This community of individual investors gradually inherited the nickname "seohak ants." The term "seohak" can be translated as "Western learning," while "ants" refers to these highly active retail investors.

However, local market dynamics have shifted profoundly under the impetus of two tech giants: Samsung Electronics and SK Hynix. Both groups are among the primary beneficiaries of the explosion in demand for next-generation High Bandwidth Memory, HBM4, which has become essential for artificial intelligence infrastructure.

Faced with demand that now outstrips supply, memory manufacturers have strengthened their pricing power, leading to a sharp increase in margins and profits. This situation appeals to both international investors and Korean retail investors, who are often in search of short-term performance.

These "ants" now represent a genuine market force. During Monday's session alone, South Korean retail investors made 2,900bn KOW in net equity purchases, or about $1.97bn, while foreign investors were net sellers to the tune of 3,500bn KOW.

The phenomenon is also accompanied by an increasing use of leverage. The South Korean Financial Supervisory Service said that retail margin trading on KOSPI shares reached 24,900bn KOW as of May 8, close to its all-time record of 25,000bn KOW, seen at the end of April.

Since the beginning of the month, retail investors have bought 7,500bn KOW worth of KOSPI shares, nearly half of which is concentrated on Samsung Electronics and SK Hynix, with 3,700bn KOW invested in these two stocks alone.

The question now remains whether the South Korean market's progress reflects a true global momentum or if it rests essentially on the craze surrounding the two semiconductor giants. This question was raised by our author Valentin Aufrand in his piece titled "South Korea: One Market, Two Trades."