The exit of South Korean retail investors is not an isolated sentiment but a "post-traumatic stress response" following the KOSPI crash in June-July 2026: the KOSPI plummeted 38.63% from its peak on June 22 to July 30, with a market value evaporating by 287.78 trillion won (approximately 1.5 times South Korea's annual GDP) within 38 days, triggering four circuit breakers, causing retail investors to shift from "FOMO (fear of missing out)" to "JOMO (joy of missing out)."

Similar cases can be compared to the retreat of retail investors from China's A-shares after the "core asset crash" in 2021 and the decline in retail trading volume after the U.S. meme stock craze subsided in 2022—reflecting the fragility of a "retail-driven market": when the profit-making effect disappears, retail investors shift from being "market leaders" to "market deserters," allowing foreign capital to seize the opportunity to buy at low prices (with a record net purchase of 7.2 trillion won on July 31).

In terms of capital dynamics, the South Korean market is showing a three-way game of "foreign capital bottom-fishing + retail investors cutting losses + pension funds shifting": foreign capital made significant purchases of Samsung Electronics (+27%) and SK Hynix (+30% limit up) on July 31, retail investors reduced their positions during rebounds, and domestic pension funds shifted from net selling 4.6 trillion won in May-June to net buying 1.0 trillion won in July, forming a layered structure of "foreign capital leading the rebound, retail investors continuously exiting, and pension funds positioning at lows."

Essentially, this is a "de-leveraging cycle for retail investors" within the context of capital concentration: when market volatility surges (losing a year's GDP in 38 days), leveraged ETFs are restricted by regulations (trading volume dropped 75% on the first day of new rules on July 30), retail investors shift from "borrowing money to invest" to "recovering principal," and the mechanism causes a negative feedback loop of "losses - redemptions - sell-offs" to form. Once this cycle begins, retail investors' "ammunition" (investment funds) and "confidence" deplete simultaneously, returning the market from "retail-driven" to "institution-driven."

ABAB News · Law of Cognition

Retail investors are not the main force in the market; they are the fuel of the market.
In 38 days, losing a year's GDP, retail investors' JOMO is institutions' FOMO.
The truth of the crash: it's not that prices are too low, but that confidence is too expensive.