Money is moving out of South Korean equities and back into bank deposits as volatility in the local stock market picks up, according to a report by Daum cited by BlockBeats on Aug. 1. The report said investor risk appetite has weakened noticeably, with funds shifting toward perceived safe-haven assets such as banks.
Daum attributed the move to a pullback in semiconductor shares and tighter regulation on leveraged investing. That combination has led to a rapid withdrawal of cash previously parked for stock investment, producing what the report described as a reverse flow of funds.
As of the end of July, time deposits at South Korea’s five major banks — KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup — stood at KRW 973.49 trillion, up KRW 24.09 trillion from a month earlier. The increase was the largest monthly gain so far this year.
Data from the Korea Financial Investment Association also showed a contraction in stock-market-related liquidity. Investor deposits in securities accounts, which are used as standby funds for stock trading, fell from a record KRW 139.69 trillion on June 4 to KRW 107.20 trillion on July 28. Margin financing balances also dropped to KRW 33.19 trillion from a peak of KRW 37.72 trillion on July 2.
Funds are flowing out of South Korea’s stock market and back into banks as volatility in local equities intensifies, according to a Daum report cited by BlockBeats on Aug. 1.
The report said investor risk appetite has cooled sharply. Money is moving toward bank deposits and other defensive assets, driven by a correction in semiconductor shares and tighter oversight of leveraged investing.
Time deposits at five major banks post biggest monthly rise this year
As of the end of July, time deposit balances at South Korea’s five major banks — KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup — reached KRW 973.49 trillion. That was up KRW 24.09 trillion from the end of the previous month, marking the largest monthly increase so far this year.
Stock-market cash and margin balances both declined
Data from the Korea Financial Investment Association showed that investor deposits in securities accounts, which serve as standby funds for stock trading, hit a record KRW 139.69 trillion on June 4. By July 28, that figure had fallen to KRW 107.20 trillion, a drop of more than KRW 32 trillion in less than two months.
Margin financing balances, a gauge of leveraged trading activity in the market, also fell to KRW 33.19 trillion over the same period. That was down about KRW 4.5 trillion, or roughly 12%, from the KRW 37.72 trillion peak recorded on July 2.
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