Korean stock market investor deposits fell to 103.87 trillion won as of the 22nd, the lowest level since February 13, according to the Korea Financial Investment Association. The decline followed a 31.5% plunge in the KOSPI index from its intraday peak of 9385.59 on the 19th of last month to an intraday low of 6429.03 on July 21. Retail investors withdrew funds or deployed cash into bargain-hunting purchases as market volatility intensified, reducing standby capital available to absorb future foreign selling pressure in Korean stocks.
Investor Deposits Drop to Five-Month Low
Investor deposits stood at 103.87 trillion won on the 22nd, rising slightly to 104 trillion won on the 23rd, the Korea Financial Investment Association reported on the 27th. Deposits had climbed from 87.82 trillion won at the end of last year to a peak of 139.69 trillion won on the 4th of last month before declining in July as market volatility increased. Investor deposits represent cash held in brokerage accounts that has not yet been deployed into stock purchases.
Credit Trading Balance Falls to Lowest Since April
Credit trading balance dropped to 32.74 trillion won on the 23rd, the lowest level since April 9 when it stood at 32.72 trillion won. Credit trading balance measures the amount investors have borrowed from brokerages for stock purchases and have not yet repaid. The decline indicates retail investors are taking a more cautious approach to leveraged investing compared to the market's earlier upward phase.
Individual Investors Reduce Buying Amid Foreign Sell-Off
Individual investors net purchased 10.76 trillion won of stocks on the main board from the 1st to the 24th of this month, while foreign investors net sold 9.83 trillion won during the same period. Individual buying volume has decreased significantly from 35.09 trillion won in May and 42.40 trillion won in June to just over 10 trillion won in July. Foreign investors have maintained net selling for three consecutive months, offloading 44.71 trillion won in May, 48.62 trillion won in June, and over 9 trillion won in July.
Analysts Cite Upcoming Earnings as Potential Catalyst
Lee Kyung-min, a researcher at Daishin Securities, stated, "Through SK Hynix's earnings announcement on the 29th and Samsung Electronics' on the 30th, along with conference calls from big tech companies, it will be possible to control uncertainty in the AI industry and semiconductor sector outlook and see a re-inflow of expectations for earnings improvement." Lee added, "Fluctuations in the KOSPI's 6000-level range early this week are an opportunity to increase weight," and "I judge this to be a section where upside potential is greater than downside risk."
Han Ji-young, a researcher at Kiwoom Securities, diagnosed, "While volatility in the Korean market continues beyond the normal range, the premise that it has entered a mid-term bottom in terms of valuation and technical perspective has not been damaged, so the key is how much rebound energy can be secured going forward."
FAQ
What caused Korean stock market investor deposits to fall in July?
Investor deposits declined to 103.87 trillion won as of the 22nd following a 31.5% drop in the KOSPI index from its peak of 9385.59 on the 19th of last month to 6429.03 on July 21. Retail investors withdrew funds or used cash for bargain-hunting purchases during the volatility.
How much did individual investors buy in Korean stocks in July compared to previous months?
Individual investors net purchased 10.76 trillion won of stocks from the 1st to the 24th of July, down from 35.09 trillion won in May and 42.40 trillion won in June. Foreign investors net sold 9.83 trillion won during the same July period.
