By Jihoon and Cynthia Lee. Scott Murdoch

SEOUL (Reuters – South Koreans have jumped in to stock market trading this year. Their enthusiasm is fuelled by a new market force – YouTube’s popular investment channels.

Cho Seongbin is 27-year-old bank worker and a dedicated stock trader. SamproTV is a channel that offers daily updates, stock picking strategies discussions and personalized investment advice. He commutes to SamproTV.

YouTube is a great way to learn about a topic or industry. It can take less than an an hour to see some shows. This saves you a lot of time over reading books and blogs,” he stated.

Stock strategies that can be derived from YouTube videos have been adopted by many retail traders across the country. Bankers believe this phenomenon to be particularly South Korean.

Cho believes it works for him. Even though he only traded late last year, his 8% rate of return this year is better than the benchmark Kospi by 5%. Cho also doesn’t see any reason to resort to traditional financial advisors or to mutual funds.

As the pandemic increases people’s motivation to find financial security, global equity markets have witnessed a rise in retail interest. But South Korea’s response has been massive.

According to industry data, there was a 49% increase in people investing in stocks domestically last year, which is about 18% of total population.

This jump is due to disillusionment in the housing market, where many young people have been priced out by a series tax hikes and mortgage curbs.

South Korean retail investors are now the largest force on the stock market. The Kospi surged 31% thanks to their $40 billion net purchase in 2020 – which was the best performance of any G20 benchmark index.

These investors also held 28% of South Korea’s market at the close of the year and accounted for almost three-quarters of South Korea’s stock trading in 2020. Retail investors in Japan, however, accounted for 22.7% and held 16.8% of the stock market by December.

NEW CHALLENGES

Traditional market players have faced new problems due to South Korea’s large number of retail investors. It has created a lot of demand for domesticIPOs but it is also making it difficult for them to be priced.

Underpricing a deal can cause it to soar on its first day of demand. The company will be unhappy as they believe money was not being spent. A Hong Kong banker who declined to be identified said that if the price is too high based on what you can see in the market, the stock may tank the very next day.”

The current equity boom has left many domestic investors wanting to do it themselves. This means that the domestic mutual fund sector is also being neglected.

Industry data shows that net investments in local mutual funds, which invest primarily in stocks, fell by 11% last year to 77.7 trillion won ($66 Billion). This was the steepest decline in a decade.

YouTube channels like Shuka World and SamproTV have many advantages over other business television shows. One is more interaction for viewers, who can post questions and get answers from experts in real-time on the program.

SamproTV was founded in 2019, and has now 1.57 million subscribers. It also noted that its content can be quickly offered, in addition to the two morning and evening programs.

Kim Dong-hwan is the main host of the channel. He says, “When there are dramatic market movements or any other content that needs to be addressed immediately, we schedule an impromptu program.”

Additionally, the channel’s benefit is that South Korean analysts provide reports at no cost. Retail investors don’t need to seek advice from financial institutions, which has allowed analysts to share their thoughts on the shows.

South Korea’s Financial Supervisory Service stated that it closely monitors the popularity of YouTube channels in order to detect any potential market volatility. However, there is no intention to regulate them.

A FSS official said that the FSS views this “from a regulatory viewpoint” and added it was hard to enforce rules when no money changes hands.

$1 = 1,182.0000 won