Korean stock market investor deposit funds dropped to 103.8765 trillion won as of the 22nd, marking the lowest level in five months since February 13, according to the Korea Financial Investment Association. The decline followed a 31.5% plunge in the KOSPI from its intraday peak of 9385.59 on the 19th of last month to an intraday low of 6429.03 on July 21, prompting retail investors to either engage in bargain hunting or withdraw funds entirely. The reduction in standby capital signals diminishing ammunition for individual investors to absorb foreign selling pressure in the Korean equity market.
Investor Deposit Funds Drop to 103 Trillion Won
Investor deposit funds reached 103.8765 trillion won on the 22nd, the lowest amount since the 99.2735 trillion won recorded on February 13. The funds had risen steeply from 87.8291 trillion won at the end of last year, peaking at 139.6948 trillion won on the 4th of last month before declining in July as market volatility increased. Investor deposit funds represent cash held in securities accounts for stock purchases but not yet deployed.
Individual Investors Net Purchase 10.7 Trillion Won in July
Individual investors net purchased 10.764 trillion won on the securities market from July 1 to 24, defending the index's lower levels as foreigners net sold 9.834 trillion won during the same period. However, individual buying activity has weakened significantly compared to prior months—retail investors net purchased 35.094 trillion won in May and 42.401 trillion won in June. Foreign investors have maintained a net selling trend for three consecutive months, offloading 44.715 trillion won in May, 48.625 trillion won in June, and over 9 trillion won in July.
Credit Balance Falls to Lowest Since April
Credit balance, an indicator of leveraged investing, dropped to 32.7492 trillion won on the 23rd, the lowest level since 32.72 trillion won on April 9. Credit balance represents the amount investors owe securities firms after borrowing money for stock investments. The decline suggests retail investors are approaching the market more cautiously amid recent volatility compared to the prior uptrend period.
Analysts Cite Inflation Risks and Valuation Opportunities
Kim Seong-geun, a researcher at Mirae Asset Securities, stated that "as military conflict between the U.S. and Iran resumes, oil prices are returning to March-May levels, and the market is again focusing on inflation risks," adding that "a conservative response to the stock market appears necessary for the time being." Lee Jae-won, a researcher at Yuanta Securities, noted that "the re-intensification of U.S.-Iran conflict and the rebound in oil prices and interest rates are macro variables that constrain the sustainability of foreign investor inflows," while observing that "KOSPI's forward P/E ratio has fallen to financial crisis levels, and relative valuation considering ROE is in an extremely undervalued range." Lee added that "foreign ownership in Samsung Electronics and SK Hynix has also fallen to historic lows, so if exchange rates stabilize and spot buying continues, additional buying capacity is large," recommending "prioritizing semiconductor large-cap stocks and expanding weight to strong earnings and oversold (KOSDAQ) sectors when supply-demand improvement (deleveraging reduction) spreads."
FAQ
What happened to Korean stock market investor deposit funds on the 22nd?
Investor deposit funds dropped to 103.8765 trillion won on the 22nd, the lowest level in five months since February 13, according to the Korea Financial Investment Association.
How much did individual investors buy in the Korean stock market in July?
Individual investors net purchased 10.764 trillion won on the securities market from July 1 to 24, while foreigners net sold 9.834 trillion won during the same period.
What did analysts say about the current Korean stock market outlook?
Kim Seong-geun of Mirae Asset Securities stated that a conservative response appears necessary as the market focuses on inflation risks from rising oil prices, while Lee Jae-won of Yuanta Securities noted that KOSPI's forward P/E ratio has fallen to financial crisis levels and is in an extremely undervalued range considering ROE.
