Witnesses of South Korea's 'Golden Era': Foreign Capital Profits, Retail Investors Take Over

By Sleepy, Daria

On the morning of July 7, Samsung Electronics delivered its best quarterly report in history. The preliminary operating profit for the second quarter was 89.4 trillion won, approximately 58 billion USD, which is nineteen times that of the same period last year and even higher than the most optimistic predictions from analysts.
At 1:51 PM, the Korea Exchange halted the entire stock market. The KOSPI index fell below 8% during trading, triggering a circuit breaker, and the market was suspended for twenty minutes, with the index dipping to a low of 7389.22 points.
This was the sixth circuit breaker this year. This system has been in place for nearly thirty years and has only been triggered twelve times in total, half of which occurred this year. Other instances include the collapse of Lehman Brothers in 2008 and the pandemic crash in 2020.
In 2026, the KOSPI reached a historic high, and everyone said it was a golden era. The brakes prepared for the crash were applied more frequently than in disaster years during this golden era.
There was something else unusual that day. Before and after the circuit breaker, foreign capital sold off significantly, while retail investors became the main buyers. During trading, foreign investors net sold nearly 40 trillion won, while individual investors net bought over 45 trillion won.
The best financial report in history and a circuit breaker occurred on the same day, separated by less than four hours. In recent days, we spoke with several retail investors in South Korea about those four hours and the entire year leading up to them.
Not Wanting to Be a Thunderstruck Poor -------
Nawon, who just graduated from university this year, has not yet found a job. In May, she bought her first stock, Samsung Electronics, purchasing just one share.
She said she had never touched stocks before, but all her friends were talking about them, and she didn't want to fall behind. That one share earned her 127,000 won, equivalent to over 600 RMB, which is the first money she has ever made on her own in her twenty-something years of life. She plans to invest it in other stocks.
Today in South Korea, there is a new term, "thunderstruck poor." 벼락, meaning thunder, refers to those who work hard, save diligently, and one day suddenly find that those around them have multiplied their assets through stocks and real estate, while they have earned nothing and have inexplicably become poor.
36-year-old Ju lives in Seoul and describes himself as a jobless wanderer, having missed this wave of market activity and earned nothing. His understanding of this term is clearer than anyone else's. He says this term has gained popularity because in today's South Korea, one cannot live a stable life solely on salary.
25-year-old Ryang is a self-employed individual who has been trading stocks for four years. In March and April of this year, he was bullish on SK Hynix and earned about 25,000 USD after buying in.
However, he often calculates not stock prices but food prices. The cost of ingredients for a meal rising from 20 USD to 21 USD is nothing, but one particular dish may have increased from 5 USD to 15 USD. Eggs are a prime example; in mid-June, a box of 10 premium eggs had an average retail price that first broke 5,000 won, nearly a 40% increase compared to the same period last year. Watermelons are also ridiculously expensive, averaging 15 USD, while the minimum wage in Korea is 7 USD, meaning it takes over two hours of work to buy a watermelon.
"Wage increases are not significant, but the overall fluctuation in prices can be outrageous at times. Wages cannot keep up with prices. Plus, with the need to travel, date, and get married, it seems the only option left is to trade stocks."
In South Korea, to live decently, one must let money work for them. And in South Korea, there have always been only two paths for making money.
One path costs billions, the other only requires a smartphone ------------------
The first path is real estate, specifically apartments.
French geographer Valérie Gelézeau once referred to South Korea as the "Republic of Apartments." In this country, apartments have been the only asset that has never disappointed its owners for decades. The price of apartments in Seoul has weathered financial crises and internet bubbles, consistently rising over the long term, which Koreans refer to as the "undefeated myth."
It is not just an asset; it is also a status symbol. In the matchmaking market, prospective mothers-in-law want to see it, and school districts for children are tied to it. Whether you are considered middle class is often judged by whether you live in an apartment and whether it is in Gangnam or Gangbuk. Real estate accounts for 78.6% of the average household assets in Korea.
But this path is now closed to young people. Since 1988, the price increase of apartments in the three districts of Gangnam has been 43 times that of the average worker's wage increase. Today, the average price of apartments in Seoul ranks fourth globally, surpassed only by Hong Kong, Zurich, and Singapore. Dreaming of buying an apartment in Seoul on a salary is unrealistic.
So only the second path remains. The ticket to the stock market only requires a smartphone and an account, allowing freshly graduated Nawon to buy a share of Samsung Electronics.
As a result, young people flocked to the stock market. According to the Korea Financial Investment Association, accounts with deposits exceeding 100,000 won and at least one transaction in the past six months are considered active accounts. Over the past year, such accounts have been growing at a rate of over a hundred thousand per month, now totaling 106 million. With a total population of over 51 million, there are more accounts than people, averaging two accounts per citizen, including infants and the elderly.
The government has also given a push. In the vision of the Lee Jae-myung administration, South Korea's wealth should not remain locked in real estate, which is an old model; money should be freed from real estate and flow into the stock market to support future industries like semiconductors and AI data centers.
In February of this year, he listed his 164-square-meter apartment for sale, quoting 2.9 billion won, slightly below market price. The president personally demonstrated that housing prices should cool down and that money should go elsewhere.
Last month, Samsung Electronics and SK Hynix announced a joint investment of 800 trillion won to build a new chip base. At the press conference, he stated, "We must be faster than any other country."
One of the most practical supporting policies is tax exemption. Those who sell overseas stocks and move the money back to Korean assets before the end of 2026 can be exempted from up to 50 million won in capital gains tax.
All Koreans are pushing in the same direction, pushing money into the market. But they seem to overlook that while the entrance door is open, the exit door is also open, and many are leaving through that side.
Foreigners sold for a year, while retail investors bought for a year ---------------
According to the Korea Exchange's ledger, in the first five months of this year, foreign investors net sold over 96 trillion won in the KOSPI. Except for slight purchases in January and April, they moved out tens of trillions in February and March.
During the same period, retail investors net bought 54 trillion won, with an additional 50 trillion won flowing in through ETFs. The two stocks that retail investors bought the most were Samsung Electronics at 28 trillion won and SK Hynix at 24 trillion won. In March, when the Iran war sent the index crashing back to 5,000 points, retail investors bought in 33.5 trillion won in one go.
The index rose from 4,000 points in October last year to over 8,000 points in just seven months, outpacing Taiwan, Japan, and Nasdaq during the same period. It was supported by South Korean retail investors, who bought it up point by point with real money.
The chips in the hands of foreign investors were mostly accumulated over many years at much lower points. This year, they sold off their chips in batches at 5,000, 7,000, and 9,000 points, converting them into USD and leaving Korea. They had already realized their profits, cashed out, exchanged currencies, and departed. What retail investors received were the highest costs in history and a string of unrealized numbers. The gains belonged to everyone, but the profits belonged to those who left first.
South Korean retail investors refer to themselves as "ants," officially called Donghak Ants. This name originated in March 2020, during the pandemic crash when foreign capital sold off Samsung Electronics, and retail investors rushed in to buy, proving to be a profitable move.
The name comes from the Donghak Peasant Movement of 1894. That year, farmers armed with bamboo spears fought against foreign forces and a corrupt government, many of whom wore talismans, believing that if they recited the right incantations, bullets would not penetrate their bodies. The uprising ultimately failed due to the disparity in equipment; bamboo spears and talismans could not stop bullets.
When they chose this name, retail investors likely thought of both its heroic and tragic endings. In 2020, the ants won, and the ominous connotation of the name was forgotten, leaving only the glorious half of the heroism.
Looking back, this is not the first time the country has sought help from its citizens' pockets. During the 1998 IMF crisis, when the won collapsed, 3.5 million people lined up to donate gold from their homes to the country—wedding rings, athletes' medals, and gold rings for children's first birthday parties, totaling 227 tons melted down.
The difference is that in 1998, the citizens gave away gold and received a country that overcame difficulties in return. In 2026, citizens are giving away principal and receiving chips in return. The price of those chips starts fluctuating every morning at 9 AM.
Winners among the ants include 22-year-old software engineer Daekyung, who started learning to trade stocks at 19. He bought Samsung, SK Hynix, and related concept stocks at the end of last year, with returns exceeding 80% at one point.
When asked about his feelings, he said, "It's just numbers changing; my life and bank savings haven't been affected much."
At that time, hearing this felt like a boast, but after July 7, it sounds somewhat prophetic; the unrealized returns are indeed just numbers.
"Perhaps this is their fate" ------------
Recently, after the stock market dropped, Ryang counted his accounts. Some stocks lost value, while others were still rising, and on average, he was lucky not to have an overall loss. He still holds onto the ones that dropped, with no plans to reduce his holdings this year.
When asked if he has experienced any ups and downs in his heart these days, he said, "For me, there hasn't been much change. If you only look at one day, it may seem extreme, but if you look at it over three months, you will understand."
A circuit breaker is measured in minutes; at 1:51 PM, it lasted twenty minutes. He changed his measuring stick to three months. Using this new measure, the large bearish candle on July 7 was merely a normal fluctuation.

Two weeks ago, news broke that South Korea once again missed out on the developed market list in MSCI's annual review, causing the KOSPI to plummet by 9.9% on the same day. A market that had been leading the world’s major stock indices saw its main buyers being newly opened retail accounts, with the president himself being the top bull. Yet, on the global capital ledger, it remains categorized alongside the past it desperately wants to leave behind: emerging markets.

Subsequently, foreign investors sold for seven consecutive trading days. By the end of June, foreign selling accelerated further. South Korean media reported that by early July, foreign investors had sold over 150 trillion won in KOSPI. On the same day, the Korean won fell to 1545 against the dollar, the lowest point since March 2009. The last time the won was this weak was during the global financial crisis.

These two events are mutually causal. As foreign capital withdrew, the won depreciated. With the won's decline, the value of Korean stocks held by foreign investors shrank when calculated in dollars, prompting them to sell off quickly. Thus, an avalanche was created. The money of the citizens returned, yet the won still fell to a seventeen-year low. The ants took over the stocks sold by foreigners, also inadvertently taking over the foreign exchange.

Ryang Liang does not harbor resentment towards foreign investors. He stated, "From the perspective of foreign investors, they inevitably consider the arbitrage gains caused by exchange rate fluctuations. Perhaps this is their fate."

In the same K-line, foreign funds saw both stock prices and exchange rates shrink simultaneously. Ryang Liang's money is in won and will be spent in won; he only sees an SK Hynix that is priced at a 20% discount.

What determines whether South Korea is considered developed is the same world money that sold off 96 trillion won this year. The 96 trillion won was taken over by a group of people who only live in won.

When asked if he made any mistakes, Ryang Liang admitted that he occasionally reflects on past decisions and recognizes some missteps. In hindsight, he noted that various signs pointed to a downturn, which he failed to notice in time. This is normal. After every major drop, a large number of people emerge claiming they saw the signals clearly, while before the drop, they dismissed those signals as noise.

When we asked him about his mindset, he said that because he had not experienced a catastrophic loss, he could not empathize. However, any degree of loss still makes him uneasy and anxious; he said this is a common psychological trait among all investors.

Indeed, there are people in the market experiencing that fatal loss for him. The forced liquidation of credit accounts has returned to a level of 50 billion won per day. Retail investors' deposits with brokers have decreased by 20 trillion won in a month. Where did that money go? The optimistic explanation is that it was used to buy stocks, while the pessimistic explanation is also that it was used to buy stocks.

As for the future market, he predicts that stock prices may continue to decline, but this is merely a short-term adjustment, and it is likely to turn upward afterward. He is the one who said, "Various signs pointed to a downturn that I did not notice," and he is also the one who said, "It is likely to turn upward afterward." He just missed the last peak and is now predicting the next bottom.

This is not meant to mock him. The 34.3 trillion won of buying power on July 7, when broken down, consists of millions of Ryang Liangs saying, "There are currently no plans to reduce holdings this year." Whether Lee Jae-myung's golden era can stand depends on how long these people can hold on.

He also left a piece of advice for other ants: when stock prices are falling, if you can see the reasons behind it, do not panic; calmly consider whether to reduce your holdings at the right time.

Seeing the reasons clearly means not panicking. The charms of yesteryear promised invulnerability, while today’s charm is to see the reasons clearly. This is probably the only insurance the ants can provide for themselves.

Matchbox

The KOSPI has fallen from a peak of 9385 to around 7400, a drop of 20%, but it has still risen about 80% since the beginning of the year. Samsung's 89.4 trillion won is also real profit.

This brings us back to the question from July 7. Why did the best financial report in history lead to a circuit breaker?

The answer lies in what these two companies sell. Samsung and SK Hynix are in the same business, storage chips, which is a well-known cyclical business. Profits soar during the upcycle and the entire industry collapses during the downcycle.

The peak of the last boom was in 2018, when Samsung's profits were also at a historical high, yet the stock price began to decline while profits were still climbing. The following year, both companies saw their profits drop by more than half. Those who have survived a cycle remember this sequence.

Now, let’s look at how the chips are stacked. Samsung and SK Hynix together account for more than half of the total market capitalization. A wealth plan for fifty million people, over a hundred million accounts, is all riding on the price curve of the same chip.

This year, not only stocks have changed hands, but also memories. The 96 trillion won that was sold off holds memories from 2018, recalling how each cycle turned around. The accounts taking over have opened over ten million new accounts in just the past year, and their memories start from the day they opened, with only upward trends.

Everyone knows that cycles will eventually turn, and everyone believes they will have time to get off before the turn.

Where have those who have already gotten off gone? In April of this year, among housing transactions totaling over 1.5 billion won, 13.2% of the purchase funds came directly from selling stocks, marking the first time this figure reached double digits, nearly three times that of most months in the past five years. The money earned in the bull market is turning into rows of apartments along the Han River. Koreans refer to these identical, square-shaped buildings as matchboxes. After a long detour, the money has returned to the box that has never failed the Koreans for decades.

However, not many can walk this path. Ryang Liang has never even considered whether he has enough to buy a house; he sees it very clearly: "Those who invest the money earned from stock trading into real estate have mostly already started laying out their real estate plans. Only those with sufficient financial strength can maximize the returns from stock investments and then channel that money into real estate. Conversely, many have made money from real estate and then invested it back into the stock market."

Money flows from houses to stocks and then back to houses. In this bull market, the number of ultra-high net worth investors with brokerage assets exceeding 10 billion won has doubled, and their average assets have increased by another 20%. The bull market has indeed distributed money to everyone.

During the six months of skyrocketing stocks, many burdens in life seemed to become simpler. The once unattainable apartments, stagnant wages, and watermelons priced at 15 dollars each seemed to be temporarily lifted by that steep upward curve, making freedom and distant dreams feel within reach.

When stocks fell, those things that had been lifted came crashing back down, returning to their original weight.

At the end of "Parasite," Ki-woo, who lives in a semi-basement, writes a letter to his father. He mentions that he has made a plan: once he earns enough money, he will buy that house, and at that time, his father just needs to walk up from the basement. The media calculated that year that, based on an ordinary person's income, it would take five hundred years. Ki-woo's plan is the same as Ryang Liang's holdings: a young person, facing an immovable house, holding onto the only hope he can grasp.

The subway Line 2 during rush hour is packed with people getting off work. This is Seoul's only circular line, starting from Gangnam, crossing the Han River, circling the city, and finally returning to Gangnam, much like the route taken by the country’s money.

In the carriage, there might be a young person quietly staring at the K-line in their account, their phone screen flickering on and off. Perhaps that person is Ryang Liang, holding onto the stocks he has no intention of selling, waiting for an upward trend he believes will come.

Outside the window, along the banks of the Han River, those apartment buildings known as matchboxes by Koreans still shine with lights.

Reference Materials [1] Samsung Electronics Announces Earnings Guidance for Second Quarter 2026, Samsung Global Newsroom [2] KOSPI Plummets Nearly 8%, Triggering First Circuit Breaker of the Year, Aju Press [3] Record-Breaking Profits, Yet the Stock Crashes? The Real Reason Behind Today’s KOSPI Circuit Breaker, Devtalk Korea [4] Number of stock accounts hits record high on bull run, The Korea Times [5] "Now Is the Time to Invest": Number of Active Stock Trading Accounts Up, Financial News [6] The world's top-performing stock market still isn't a developed market, CNBC [7] Foreign investors may have more Korean stocks to sell, The Korea Times [8] Seoul ranks 4th in global apartment prices, but just 34th in quality of life, The Korea Times [9] On the Republic of Apartments, Taylor & Francis Online [10] Stock profits shift into Seoul housing as 30s lead buying in South Korea, Chosun Biz [11] Foreign Media Sees Korea's Stock Boom Fueling Property Market, Seoul Economic Daily