Korean individual investors' stock deposit accounts decreased by 28.4 trillion won from June 4 to July 14, but analysts from Hyundai Motor Securities and Shinying Securities interpret this as active stock purchasing rather than market exit. According to the Korea Financial Investment Association, investor deposits peaked at 139.7 trillion won on June 4 before falling to 111.3 trillion won by July 14, a 20.3% decrease. Individual investors net purchased 27 trillion won in individual stocks and 8.8 trillion won in domestic stock ETFs after KOSPI recorded its closing high on June 22, totaling 35.8 trillion won in net purchases—14.8 trillion won more than the deposit decrease of 21 trillion won during the same period. Kim Jae-seung, researcher at Hyundai Motor Securities, stated that the deposit decrease reflects aggressive buying during the decline that began in late June, emphasizing that interpreting this as individual investor exit or deteriorating retail demand would be premature.
Individual Investors Net Purchase 35.8 Trillion Won After KOSPI June 22 High
Individual investors actively purchased Korean stocks following KOSPI's closing high on June 22. They net purchased 27 trillion won in individual stocks and 8.8 trillion won in domestic stock ETFs during this period. Customer deposits decreased by 21 trillion won over the same timeframe. The combined net purchase amount of 35.8 trillion won exceeded the deposit decrease by 14.8 trillion won.
Hyundai Motor Securities Interprets Deposit Decrease as Fund Deployment
Hyundai Motor Securities attributes the deposit decrease to active stock purchases during the market decline rather than capital flight. Kim Jae-seung, researcher at Hyundai Motor Securities, stated: "The customer deposit decrease should be viewed as investment funds being consumed through aggressive buying in the downturn that continued from late June." He added: "It is premature to interpret the customer deposit decrease as a signal of individual investors exiting the domestic stock market or deteriorating retail demand," emphasizing that "the customer deposit decline is a result, not a cause."
Shinying Securities Estimates 112 Trillion Won Actual Cash Inflow Since November
Shinying Securities calculated actual market cash inflows by accounting for settlement timing differences and changes in credit margin and unpaid balances. According to their analysis, actual cash flowing into securities accounts since November last year totaled approximately 112 trillion won. During the same period, deposit balance increased by 33.4 trillion won. The actual inflow exceeded the balance increase by threefold. The researcher stated: "Looking only at deposit balances would underestimate the actual inflow scale to about one-third," diagnosing that "the recent deposit decrease is closer to deployment of ammunition rather than depletion of ammunition." The approximately 79 trillion won difference represents funds that entered securities accounts and were immediately used for stock purchases rather than exiting accounts, according to the analysis.
Shinying Securities analyzed 48 instances since 2000 when KOSPI fell more than 5% in a single day. After such declines, the proportion of periods turning positive returns was higher. Average returns were 3.6% after one week and 13.2% after three months. Examining only 11 instances of 8% or greater single-day declines, the three-month average return rose to 21.4%. Among the 48 instances, only 13 recorded negative six-month returns, with 11 of these occurring during the 2000-2002 IT bubble collapse period.
Credit Margin Balance Reaches Record 38.6 Trillion Won on June 24
Credit margin balance reached a record high of 38.6 trillion won on June 24. This represents 5.8 times the 6.6 trillion won recorded in March 2020 and 55% more than the 24.9 trillion won peak in 2021. However, the credit margin ratio relative to market capitalization has decreased compared to the past as total market capitalization has also grown. Credit concentration in large-cap stocks such as Samsung Electronics and SK Hynix differs from past patterns, as these stocks have high trading volumes and relatively solid earnings foundations.
Analysts Identify Selling Pressure Risk in KOSPI 7,000-8,500 Range
Individual investor buying concentrated in the KOSPI 7,000-8,500 range. Kim Jae-seung, researcher at Hyundai Motor Securities, stated: "Rather than focusing on reduced investment capacity, attention should be paid to the possibility of selling pressure emerging during future rebounds, given that individual investor buying was concentrated in the KOSPI 7,000-8,500 range." He noted: "Individual investors have a pattern of selling when the domestic stock market rises and buying when it falls."
KOSPI's 12-month forward earnings per share rose over 5% after the peak, while the 12-month forward price-to-earnings ratio fell to the mid-6x range due to stock price declines. The researcher stated: "Selling during sharp decline phases has not been statistically profitable," adding that "unless the cause of the decline is systemic risk, mechanical selling in the downturn has led to missing subsequent rebounds."
FAQ
Why did Korean investor deposits decrease by 28 trillion won from June to July?
Investor deposits decreased by 28.4 trillion won from 139.7 trillion won on June 4 to 111.3 trillion won on July 14 because individual investors actively purchased stocks during this period. They net purchased 35.8 trillion won in stocks and ETFs after KOSPI's June 22 closing high, which exceeded the deposit decrease. Analysts interpret this as fund deployment for stock purchases rather than market exit.
What did Hyundai Motor Securities say about the deposit decrease?
Kim Jae-seung, researcher at Hyundai Motor Securities, stated that the customer deposit decrease reflects investment funds being consumed through aggressive buying during the decline that began in late June. He emphasized that interpreting this as individual investor exit or deteriorating retail demand would be premature, stating that the deposit decline is a result rather than a cause.
