South Korean investors are pulling money out of the stock market and moving it into bank deposits and other defensive assets, according to Daum. The report said market volatility has intensified, risk appetite has weakened, and cash that had been waiting on the sidelines for equity trading is leaving the market quickly. The shift has been linked to a correction in semiconductor shares and tighter oversight of leveraged investing.
Data cited in the report showed that term deposits at South Korea’s five major banks — KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup — reached KRW 973.49 trillion at the end of July, up KRW 24.09 trillion from the end of the previous month. That marked the largest monthly increase so far this year.
At the same time, brokerage cash balances used for stock trading fell sharply. The Korea Financial Investment Association’s figures showed investor deposits in securities accounts dropped from a record KRW 139.69 trillion on June 4 to KRW 107.20 trillion as of July 28. Margin loan balances also declined to KRW 33.19 trillion from a peak of KRW 37.72 trillion on July 2, a drop of about KRW 4.5 trillion, or roughly 12%.
Funds are moving out of South Korea’s stock market and back into bank deposits and other defensive assets as volatility picks up and investor risk appetite cools, according to Daum.
The report said cash waiting to be deployed into equities has been leaving the market quickly, with the shift tied to a correction in semiconductor shares and tighter regulation of leveraged investing. Daum described the move as a reverse flow of funds.
Term deposits at five major banks post biggest monthly increase this year
Data cited in the report showed that term deposit balances at South Korea’s five largest banks — KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup — reached KRW 973.49 trillion at the end of July. That was up KRW 24.09 trillion from the end of the previous month, the largest monthly increase recorded this year.
Trading-related cash and margin balances contract
Figures from the Korea Financial Investment Association showed that investor deposits in securities accounts, which represent cash waiting to be used for stock trading, hit a record KRW 139.69 trillion on June 4. By July 28, that balance had fallen to KRW 107.20 trillion, down by more than KRW 32 trillion in less than two months.
Margin financing balances, a gauge of leveraged trading activity in the market, also fell over the same period. The balance dropped to KRW 33.19 trillion, compared with a peak of KRW 37.72 trillion reached on July 2. That was a decline of about KRW 4.5 trillion, or roughly 12%.
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