Who is buying and selling stocks (flows), and the rules that run the market, such as short selling, price limits and circuit breakers. 24 terms in total.
The three groups of traders in the Korean market. Retail means individual investors, foreign means overseas investors, and institutional means companies such as pension funds, asset managers, insurers and banks. Brokerage apps show net buying by group every day.
How much foreign and institutional investors (pension funds, asset managers and others) bought and sold in Korean stocks. Sustained buying by these big players often gives the price extra momentum.
The subgroups of institutional investors. Pension funds are pensions and funds like the National Pension Service, investment trusts are asset managers running public funds, and private funds pool money from a small number of investors. Pension funds tend to think long term, while private funds act on shorter horizons.
Amount bought minus amount sold: positive is net buying, negative is net selling. When a group is a net buyer of a stock for several days in a row, it is read as steadily accumulating it.
e.g. If foreigners buy 100 billion won and sell 70 billion won, that is 30 billion won in net buying
Trading in which computers buy and sell many stocks at once under preset conditions. It splits into arbitrage trades that exploit price gaps between futures and stocks and non-arbitrage basket trades, and it has a large effect on large-cap prices.
The most a Korean stock can rise or fall in one day. On both KOSPI and KOSDAQ, a stock can move only 30% up or down from the prior close; hitting the top is called the upper limit and the bottom the lower limit. U.S. stocks have no such daily limit.
A Korean mechanism that, when a single stock moves sharply and suddenly, switches to a call auction for about 2 minutes, collecting orders and matching them at one price. It is meant to cool sudden spikes and drops and give investors time to think.
A rule that temporarily halts trading across the whole market when an index falls sharply in a short time. In Korea it triggers at each step when the index falls 8%, 15% and 20% from the prior day, and the U.S. also halts trading in stages based on the S&P 500's decline. It is meant to stop panic selling.
A Korean rule that suspends program trading orders for 5 minutes when futures prices swing sharply. It is a milder warning than a circuit breaker and keeps futures turmoil from spreading to the stock market.
A method that gathers orders for a set time and matches them all at one price. Korean stocks use call auctions before the open (8:30 to 9:00) and before the close (15:20 to 15:30) to set the opening and closing prices.
Trading outside regular market hours. Korea has after-hours closing-price trading before the open and after the close, plus after-hours single-price trading; the U.S. has pre-market and after-market sessions. Volume is thin, so prices can jump around.
e.g. If earnings come out after the close, the price moves first in the after-market
Borrowing shares, selling them first, and buying them back later to return them. Because it profits when the price falls, a high short ratio means many investors are betting on a decline.
Short interest is the amount of shorted shares not yet returned, and the short ratio is the share of total trading that is short selling. In the U.S., short interest as a percentage of float is widely watched, and a higher figure means more investors are betting on a decline.
The amount of shares borrowed between brokers and institutions that has not yet been returned. Short selling requires borrowing shares first, so a rising lending balance is sometimes read as a sign that short selling may increase.
Short sellers buying shares back in the market to return the ones they borrowed. When this buying piles up, it can push the price higher.
When a rising price hurts short sellers and they rush to buy back shares, and that buying pushes the price up even further. It is one reason heavily shorted stocks can surge in a short time.
The margin loan balance is the unpaid amount of borrowed money investors used to buy stock through a broker. When the price falls and collateral runs short, the broker sells the shares by force to recover the debt, which is called forced liquidation. A wave of forced liquidations can deepen a decline.
Records of executives or major shareholders buying and selling their own company's stock. They are disclosed in the U.S. through SEC Form 4 and in Korea through reports on executive and major shareholder holdings, and Korea also has an advance disclosure rule for trades above a certain size. Sales under a preset plan (10b5-1) often mean little.
In Korea, anyone who comes to hold 5% or more of a company must disclose the holding within 5 business days, and again each time it changes by 1% or more. The U.S. has similar rules (Schedules 13D and 13G). They show who is building a stake.
A quarterly report filed with the SEC by U.S. institutions managing $100 million or more, listing their stock holdings. It comes out within 45 days after quarter-end, so it gives a delayed look at famous investors' portfolios.
The share of all issued shares that can actually be traded in the market, after excluding stakes held by major shareholders, treasury shares and similar. A low free float lets prices move a lot on little trading, and it is also used to set index weights.
Indexes such as the KOSPI 200 and S&P 500 change their constituents on a regular schedule. Funds tracking the index buy stocks being added and sell those being removed, so prices often move around the announcement.
A set of global stock indexes made by the U.S. firm MSCI, widely used as an investment benchmark by institutional money worldwide. Korea has long been classified as an emerging market, and whether it will be reclassified as developed is a constant topic because it could bring in more foreign money.
Passive money is in funds and ETFs that simply track an index, and active money is managed by people who pick stocks to beat the index. The bigger passive money grows, the more index inclusion affects a stock's price.