South Korean retail investors swiftly shift from FOMO to JOMO: "Those who didn't buy stocks are the real winners!"

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The South Korean stock market has experienced a dramatic reversal within a month, with investors’ attitudes undergoing an equally dramatic shift. Last month, when the KOSPI index broke through 9000 points and looked set for 10,000, the market was full of FOMO (fear of missing out) sentiment—"only I didn’t get on board"; after the index then plunged by over 30%, JOMO (joy of missing out)—"lucky I didn’t enter"—is rapidly spreading among retail investors.

On Tuesday this week, the KOSPI index plunged 10.76%, marking the biggest single-day drop since 1998. The total decline from last month’s peak of 9063.84 now exceeds 33%. The tech-heavy KOSDAQ fell below the 700 mark that day, hitting its lowest level since April last year. Both markets triggered circuit breakers; KOSPI has triggered circuit breakers eight times this year, more than half the historical total of fourteen times.

The market crash has caused significant losses for retail investors, with both standby funds and margin balances declining. Investment sentiment has shrunk dramatically. Meanwhile, opinions diverge in the securities industry: some analysts view extreme pessimism as a contrarian buying signal, while other institutions have raised their KOSPI target for the second half of the year to 9000 points.

Retail Investor Mood Reverses 180 Degrees: JOMO Replaces FOMO

In the first half of this year, the KOSPI soared, and investors who missed out felt intense FOMO. Semiconductor giants Samsung Electronics and SK Hynix led the rally; SK Hynix nearly reached 3 million won during trading. Those without positions felt anxious, triggered by friends’ "getting rich overnight" stories.

As the market reversed, the tone of online investor communities quickly changed. Posts like "I’m so lucky I didn’t buy" and "People who didn’t buy are the winners" appeared frequently. One netizen (25 years old) who never entered the market said, "During the first half of the year, every time I heard friends say they earned enough from stocks to buy a car, I felt really envious. But now, after hearing that the friend who bragged about buying a Genesis can’t even afford a used car, I feel ‘lucky I didn’t enter the stock market,' and I don’t plan to invest in stocks anymore."

FOMO and JOMO appear to be opposites, but in essence are both reevaluations of one’s choices after outcomes are revealed.

Plunge Data: Frequent Circuit Breakers, Blue Chips Halved

The severity of this downturn is evident in the data. The KOSPI is down more than 33% from its peak, and KOSDAQ has fallen to 701.33, its lowest since April last year. According to Investing.com data, South Korea’s main indices had the world’s biggest declines in the past month, in sharp contrast to the S&P 500, which dropped around 0.39% over the same period.

At the individual stock level, Samsung Electronics is down 31% from its peak, while SK Hynix is down 38%. According to Korea Investment & Securities analysis, as of the 27th, 42% of the 872,000 Samsung Electronics investors are in the red, while 57% of SK Hynix’s 400,000 investors are losing money. With further sharp falls on the 28th, the percentage of loss-making investors is expected to rise.

On the same day, both the KOSPI and KOSDAQ markets triggered sell-side pauses and circuit breakers. This year, KOSPI triggered circuit breakers eight times, more than half of all historical fourteen triggers.

Accelerating Fund Outflows: "Ammo" and Leverage Both Shrink

The consumption of retail investors’ "ammo" reflects the shift in sentiment. According to the Korea Financial Investment Association, as of the 24th, investor trust funds totaled 105.637 trillion won—a decrease of about 31 trillion won from the high of 136.831 trillion won on the 23rd of last month, and the lowest in about five months. Trading volume has also shrunk to 34.5238 trillion won, down by over 33% from 51.8113 trillion won at the start of the month.

Leverage is also contracting. Margin balances for credit trades dropped to 32.6717 trillion won, the lowest in about four months, down by about 6 trillion won from the high of 38.6328 trillion won. From June 24 to July 24, total forced liquidation (reverse trades) amounted to 997.1 billion won, showing persistent forced selling during the steep fall.

Analysts note that pessimism among retail investors and fund outflows may create resistance to future rebounds—if investors sell on every stock price rise to cut losses, the index’s rebound elasticity is limited.

Market Divergence: Is Extreme Pessimism a Trap or an Opportunity?

Despite the depressed sentiment, the securities industry is divided over the outlook.

Kim Min-geun, a researcher at Korea Investment & Securities, said ,"Ironically, such extreme pessimism can also be read as a contrarian signal—if most investors have finished selling, and additional sell orders decrease, even minor positive news may trigger a rebound."

DS Securities’ second half outlook report said, "Even with earnings per share dropping by 30% in the worst-case scenario, KOSPI is still undervalued," and raised the second half KOSPI target to 9000 points.

In the semiconductor sector, Morgan Stanley analyst Joseph Moore wrote in a report to investors that this correction is a buying opportunity. He believes memory semiconductor shortages will worsen in 2027-2028, and forecasts memory prices to rise at least 25% in the third quarter versus the prior quarter. "The downward phase of this cycle is unavoidable, but the current weakness should be viewed as a buying opportunity."

For investors who still remain in the market, maintaining judgment as JOMO sentiment spreads may be the biggest current challenge.

Risk Warning and DisclaimerThe market contains risks. Investment must be made prudently. This article does not constitute personalized investment advice and does not take into account the individual user’s unique investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their specific circumstances. Investment based on this article is at the user’s own risk. ```