Stock deposits in Korea thin to 2-yr low as retail buy sinks nearly 90% from H1

[Graphics by Song Ji-yoon]

Deposits in Korea for stock investment have thinned to the lowest level in two years as markets revisit the lows of 2020 pandemic outbreak amid fast shift to monetary tightening and looming recession fears.

According to Korea Financial Investment Association on Friday, the daily average of deposits made by investors in the Korean stock market for the first six trading days this month stood at 50.73 trillion won ($35.53 billion). On Oct. 7 and 12, the figure recorded 49.30 trillion won and 49.64 trillion won, respectively, dipping below the 50 trillion won mark for the first time in two years since October 2020.

The average daily deposits plunged 25 percent from 67,368 billion won between January and this month.

Investor deposits, which are a bellwether for investor sentiment, are money that an investor puts in a brokerage account to buy stocks or do not pull them out after selling stocks.

Individual investors, who have led a rally during lush liquidity environment amid pandemic, are deserting stock market due to uncertainties. Their net purchases in the Korean stock market fell by 86 percent to 3.84 trillion won so far in the second half of this year from 27.81 trillion won in the first half.

Their exit has turned the market lethargic.

According to Korea Securities Depository, daily stock settlement in the third quarter averaged at 1.34 trillion won, off 29.6 percent from the same period last year and 11.4 percent from the second quarter. The average daily amount of stock settlement by institutional investors was 750 billion won, down 9.5 percent from the previous quarter and 28.4 percent from a year earlier.

In contrast, deposits for exchange-traded derivatives such as futures and options, recovered to early-year levels to underscore increased market volatility. The figure rose to 12.12 trillion won on a daily average this month after falling to 10 trillion won at the end of last year from 13 trillion won in the first quarter of last year.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]