Korean stock market investor deposits decreased by nearly 30 trillion won over one month amid heightened volatility, according to data from the Korea Financial Investment Association. As of the 15th, investor deposits stood at 109.87 trillion won, down approximately 21% from 139 trillion won recorded early last month. During the same period, individual investors net purchased over 35 trillion won in domestic stocks and exchange-traded funds (ETFs), suggesting the deposit decline reflects actual stock purchases rather than capital flight from the market. Deposits remain above 100 trillion won, and industry analysts view the decline as a lagging indicator rather than evidence of mass investor exodus.
Investor Deposits Fall 30 Trillion Won While Net Stock Purchases Exceed 35 Trillion Won
According to the Korea Financial Investment Association, investor deposits totaled 109.87 trillion won as of the 15th. This represents a decline of approximately 21% compared to early last month when deposits exceeded 139 trillion won. Investor deposits—funds placed in securities accounts for stock purchases—are considered a key indicator of market standby capital. These deposits grew rapidly as the KOSPI surpassed 8,000 points but have since declined as the index experienced daily fluctuations of around 10%.
However, the deposit decrease does not directly indicate investor withdrawal from the stock market. Individual investors net purchased 27 trillion won in domestic individual stocks after the KOSPI recorded a closing high on the 22nd of last month. During the same period, they also purchased 8.8 trillion won worth of domestic equity ETFs.
The combined net purchases of stocks and ETFs total 35.8 trillion won, exceeding the 21 trillion won deposit decrease by 14.8 trillion won. This suggests that standby capital in securities accounts was used for actual purchases, with some additional external funds potentially flowing into the market.
NH Investment Analyst Cites Lagging Supply Indicators and Limited Forced Liquidation
Market observers note that standby capital remains above 100 trillion won, indicating investors have not departed the market en masse. Kim Byung-yeon, director of the investment strategy division at NH Investment & Securities, stated: "Two months ago, there was talk of a money move with forecasts that 300 trillion or 400 trillion won could flow into the stock market, but now there is talk of no money. Supply is fundamentally a lagging indicator."
Kim added: "Customer deposits have decreased, but redemptions have not begun in earnest, and deposits still exceed 100 trillion won. As securities firms have raised margin requirements, forced liquidation volume has remained at only 0.5% of the total, so forced liquidation pressure is not as strong as in the past."
Financial Industry Sees Low Probability of Capital Shift to Bank Deposits
The likelihood of funds exiting the stock market moving directly to bank savings accounts is considered limited. Investors who have experienced both high returns and significant volatility over a short period are unlikely to return to deposit products with relatively low expected returns.
A financial investment industry official stated: "I believe the probability of investors who have experienced daily index swings of 5% moving to savings accounts is low. While some investors who suffered large losses may leave the stock market entirely, funds in the stock market will not shift en masse to savings accounts."
FAQ
What happened to Korean stock market investor deposits as of the 15th?
Investor deposits decreased to 109.87 trillion won as of the 15th, down approximately 21% from 139 trillion won recorded early last month, representing a decline of nearly 30 trillion won over one month.
Why did investor deposits decrease despite net stock purchases exceeding 35 trillion won?
The deposit decline reflects actual stock purchases rather than capital flight. Individual investors net purchased 35.8 trillion won in stocks and ETFs during the same period, exceeding the 21 trillion won deposit decrease, indicating standby capital was deployed for purchases with additional external funds potentially entering the market.
What is the industry view on whether investors are leaving the Korean stock market?
Industry analysts view the deposit decline as a lagging indicator rather than mass exodus. Deposits remain above 100 trillion won, forced liquidation volume is only 0.5% of total, and the likelihood of funds shifting to bank deposits is considered low given investors' recent experience with high volatility and returns.
