KOSPI breaks 3,000 points
Posted : 2021-01-07 16:06
Retail investors should be cautious in overheated market
Korea's stock price index surpassed 3,000 points Thursday for the first time in the bourse's 38-year history. A combination of factors pushed the KOSPI into untrodden territory, such as abundant liquidity thanks to the government's massive release of fiscal funding to help overcome the impact of COVID-19; a craze among individual investors, seen as acting like "a colony of ants"; and an optimistic outlook on high-tech industries such as secondary batteries, biopharmaceuticals and electric vehicles.
However, this is the time for retail investors to listen to warnings against the market's unprecedented steep surge. It is unusual for the finance ministry and the central bank to simultaneously issue a warning on the gulf between the stock market and the real economy. Particularly, individuals should refrain from investing in the stock market with borrowed money. The government ought to fully prepare for managing risks arising from this excess liquidity.