September 10, 2020 12:15
Private investors in Korea who parked their money in U.S. tech stocks are losing sleep as the Nasdaq took a nosedive recently.
U.S. tech stocks had grown steadily for five months despite the coronavirus epidemic but plummeted more than 10 percent over the three trading days from Sept. 3 to 8.
Korean retail investors own more than W4.6 trillion worth of Tesla stocks, for example, and when Tesla plummeted more than 20 percent on Tuesday they lost more than W970 billion (US$1=W1,188). Many of them only started to invest these stocks when their prices were already overheated.
According to Korea Investment and Securities, which runs a smartphone app that allows investors to buy small amounts of foreign stocks, about 70 percent of retail investors in Korea in their 20s and 30s own U.S. IT shares.
One 35-year-old office worker said he is afraid to look at his phone these days. Oh parked his entire W25 million in savings in Tesla shares last month when they went through the roof.
It is 10:30 p.m. in Korea when the New York Stock Exchange opens, and Oh used to fall asleep with a smile on his face when he first bought the stocks. But now he is losing sleep.
According to the Korea Securities Depository, the five most popular stocks among private investors here are Tesla, Apple, Amazon, Microsoft and Nvidia. They own US$9.75 billion worth of them, including W$3.88 billion worth of Tesla. Tesla stocks soared almost 500 percent until late August, but sank 33.7 percent so far this month, including Tuesday's 21.1-percent nosedive.
The Nasdaq appeared headed through the roof until Sept. 2, surpassing 12,000 points for the first time ever, but plunged 4.96 percent on Sept. 3 and another 4.1 percent on Tuesday. It slightly bounced back on Wednesday to close 2.7 percent higher.
Analysts are divided, with some brushing off the decline as routine profit-taking, while others say the drop is a precursor to a bubble bursting. One thing they agree on is that tech stocks will remain highly volatile until the U.S. presidential election on Nov. 3.
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