Asia's 'ant' and 'moth' investors test broker nerves
28/01/2021 13:39
* Six brokers cut margin loans in South Korea
* Shorted stocks soaring in Australia and Japan
* GameStop frenzy lifts Australian nickel company GME
By Tom Westbrook
SINGAPORE, Jan 28 (Reuters) - Asia's retail investors,
emboldened by the meteoric rise of U.S. videogame retailer
GameStop, are taking on short sellers and making their brokers
nervous enough to cut off margin lending.
In South Korea, small investors known as "ants" have
borrowed so much money to dabble in stocks that at least half a
dozen brokerages have stopped offering them leverage.
GameStop's GME.N global impact is the latest manifestation
of a day-trading mania driven by amateur investors that is
boosting the price of assets ranging from cryptocurrencies to
new stock market listings. urn:newsml:reuters.com:*:nL4N2K32R4
"Not afraid, not flinching," said Ji-Han Kim, who works at a
food delivery chain in Seoul and whose stock portfolio includes
Chinese drone-maker Ehang EH.O , which he says has made him a
412% return, and chip giant Samsung Electronics 005930.KS .
"I see it as a bubble that doesn't burst for a while."
However, this euphoria is not universal and Korea Financial
Investment Association data shows six South Korean brokerages
stopped margin lending this month, after loan values hit a
record 21.6 trillion won ($19.3 billion) this week.
"Any more lending to ants would go against the capital
requirement ratio for brokerages," said Kwak Sang-jun, a
stockbroker at Shinhan Investment Corp in Seoul.
"No-one expected the rally would be this explosive, and
trading demand from retail investors would grow this explosive."
The retail phenomenon is widespread across Asia, where
small-time traders have long played an outsized role, especially
in markets such as South Korea and China. But investors are
becoming younger, much more leveraged and influential.
In Thailand, where they are known as "moths", such investors
piled into local cannabis-related stocks on Thursday in
anticipation of regulatory changes by the government there.
In Hong Kong, retail investors borrowed more than $50
billion to buy shares in Chinese video sharing app Kuaishou
Technology's 1024.HK float. urn:newsml:reuters.com:*:nL4N2K31Y0
And in Australia and Japan, heavily shorted stocks are
surging as small investors try and emulate the squeeze that has
driven GameStop shares up 17-fold in little more than two weeks.
GAMESTOP NOT OVER
GameStop has become the poster-stock for apparently
coordinated small-investor buying, marshalled over online forums
such as Reddit, and aimed at inflicting pain on big hedge funds
who had bet it would struggle and its stock would fall.
It was the most-traded stock at brokers Stockal and Vested
Finance in India and a tiny Australian nickel explorer with a
similar ticker, GME Resources GME.AX , rose as much as 50% on
Thursday in Sydney. urn:newsml:reuters.com:*:nL1N2K309A
Such trades lit up market forums such as chat app Telegram,
Kakao Talk in South Korea and 2 channel in Japan, as prices
reacted to the retail army, though with much less of the fury of
Reddit forums and much more enthusiasm for locking in gains.
"People are calling me and saying: I'm FOMO, I think I'm
missing something," said Chris Brankin, CEO at TD Ameritrade in
Singapore, a platform for local investors to buy U.S. stocks.
Along with fellow retail darling AMC Entertainment AMC.N ,
GameStop has topped volumes over last few days for Saxo Capital
Markets, said its Asia-Pacific CEO Adam Reynolds, adding new
account volumes are "insane", with 80% of new clients under 40.
"Because they're getting better and because they're getting
more confidence, it's sometimes the institutional (investors)
who are getting a bit overrun," Reynolds said.
Retail investors made up 67% of average daily trading volume
on South Korea's main KOSPI market .KS11 last year and a "buy
everything" market has lifted it 113% since March. urn:newsml:reuters.com:*:nL1N2K1037
SHORT SHRIFT
Asian markets were jittery on Thursday and painful for short
sellers, as some heavily shorted companies jumped.
In Australia, funeral operator InvoCare IVC.AX , salmon
farmer Tassal TGR.AX and poultry producer Inghams ING.AX ,
all of which have short interest levels higher than 8% according
to regulatory data, leapt to multi month highs.
Japan's most shorted stock, telecom equipment maker Anritsu
Corp 6754.T , touched a two-decade high.
In China, where investors are more familiar with the swings
and roundabouts of a market in which fickle retail buyers
command price moves, traders were admiring of the role adopted
by U.S. retail investors but said that such stock volatility
would trigger action by Chinese regulators.
"Retail investors in the U.S. are marvellous," read one
well-liked post on a chat app run by Hithink RoyalFlush.
For Chinese cryptocurrency entrepreneur Justin Sun, who
bid$4.6 million for a charity lunch with Warren Buffet in 2019,
the GameStop party is not over.
"I'll be buying $1 mil of $GME tonight," he said on Twitter.
"Watch out, Asians are coming!"
($1 = 1,118.8500 won)
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
"We love this stock": GameStop effect spreads as calls for probe
build urn:newsml:reuters.com:*:nL4N2K32R4
Losses on short positions in U.S. firms top $70 bln - Ortex data
urn:newsml:reuters.com:*:nL8N2K3506
Short sellers face derision, death threats and unexplained pizza
urn:newsml:reuters.com:*:nL1N2K307I
Inspired by GameStop, Malaysian retail investors look to prop up
medical glove shares urn:newsml:reuters.com:*:nL8N2K22EA
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Tom Westbrook in Singapore; Additional reporting
by Cynthia Kim in Seoul, Stanley White in Tokyo, Luoyan Liu in
Shanghai, Joori Roh in Seoul, Abhirup Roy in Mumbai, Scott
Murdoch and Alun John in Hong Kong and Orathai Sriring in
Bangkok.
Editing by Vidya Ranganathan and Alexander Smith)
((tom.westbrook@tr.com; +65 6318 4876;))