Business
Small investors become dip buyers as energy shock sinks stocks
Small investors become dip buyers as energy shock sinks stocks
About this update from Hyundai Rotem Co.
By Jihoon Lee and Gregor Stuart Hunter Retail traders in Asia are loading up on borrowed money to fund purchases in their brokerage accounts, traders and dealers said, as they chase oil and energy prices higher and scoop up sinking stocks. An energy shock walloped markets on Monday with crude prices leaping to almost $120 a barrel and stocks, bonds, gold and nearly everything except the dollar sliding on worries about a prolonged war in Iran. Yet in Seoul - an epicentre of recent market losses - retail investors were net buyers on Monday to the tune of 4.6 trillion won ($3 billion), increasing their total month-to-date purchases to 15.2 trillion won.Among them was Kwon Soon-kuk, a 34-year-old Seoul resident who sold 60 million won worth of defence firm Hyundai Rotem KRX:064350 and others, while at a coffee shop on Monday morning, to buy stocks like Samsung Electronics KRX:005930 on the dip."No matter how much it fluctuates up and down, it will eventually go the way it is headed towards," he said as the Kospi's losses extended to as much as 8.8%. Investors have made fresh margin payments to extend positions as well as top up where they have incurred losses, brokers said. The behaviour is emblematic of a habit of dip buying honed in seemingly unstoppable markets in the years since retail trading exploded in popularity during pandemic lockdowns - one which has repeatedly proven highly lucrative. Some performances have bested slower-moving professionals and their enthusiasm has lifted volumes - especially in the U.S. and Hong Kong - and given the crowd more influence over prices, sometimes exacerbating volatility as many are eager to take big risks. Investors from China flooded into Hong Kong through the Stock Connect trading link on Monday, with buying hitting a record HK$37 billion ($4.73 billion) as amateur traders rushed to snap up bargains. The Hang Seng Index fell 1.3% and a gauge of Chinese companies with listings in the city slid 0.5%, the shallowest of the declines among major Asian benchmarks. "The most common question I get is: 'When do I buy the dip?,'" said Michael McCarthy, CEO of Moomoo Australia, where volumes surged 25% over Friday's figures on Monday and nearly 55% of trades by dollar value were buys."I mean it's entirely understandable," he said. "These guys have had a fantastic experience for five years ... but this one looks bad to me." M...