"Will the Middle East war drag on?" Nervous retail investors pull out 1 trillion won a day from deposits

More than 1 trillion won a day on average is flowing out of domestic securities accounts. As concerns grow over a prolonged Middle East war and market volatility increases, individual investors are increasingly taking a wait-and-see approach.
According to the Korea Financial Investment Association (KOFIA) on the 29th, investor deposits stood at 111.579 trillion won as of the 26th. This is a drop of more than 20 trillion won in just three weeks compared with the record high of 132.0682 trillion won on the 4th. From the 5th of this month, deposits have decreased by about 1.28 trillion won per trading day over 16 sessions. Investor deposits are funds that investors leave in their securities accounts to buy stocks or that remain after stock sales, and can flow into the equity market at any time as ready-to-invest cash.
Actual trading value is also on the decline. In the early part of this month (3–10), average daily trading value on the Korea Composite Stock Price Index (KOSPI) and KOSDAQ (Korea Securities Dealers Automated Quotations) reached 57.5478 trillion won. However, from the 10th to the 27th, it fell to 38.7466 trillion won, a drop of nearly 19 trillion won. Turnover of investor deposits has also fallen, indicating slower "churn" in the market. The turnover ratio of deposits represents the share of investor deposits that is actually traded in the stock market. From the start of this month through the 26th, the turnover ratio was 37.04%, down from 44.38% in the previous month. It had surged to the 50–60% range in early April but slumped to around 30% from mid-month. Most of the money leaving stocks is moving into short-term financial products considered safe havens. KOFIA data show that balances in money market funds (MMFs) reached 244.3567 trillion won as of the 26th, up about 10 trillion won from 234.8079 trillion won on the 3rd. Compared with 200.9963 trillion won at the start of the year, MMF balances have jumped by roughly 44 trillion won in 2024.
An MMF is an ultra-short-term bond fund that invests in short-term Treasury bonds, commercial paper (CP), and certificates of deposit (CD). It allows free deposits and withdrawals and can generate returns even when money is parked for just one day. Balances in another short-term product, the Comprehensive Asset Management Account (CMA), are also rising. CMA balances increased from 107.0256 trillion won on the 3rd to 110.5736 trillion won on the 26th, an increase of more than 3 trillion won.
Lee Sang-heon, a researcher at iM Securities, noted, "In January and February this year, stock indexes kept climbing, so funds steadily flowed into the market. But as volatility has increased this month, investor sentiment has deteriorated," adding, "If the market remains range-bound, capital inflows are likely to shrink."
jisseo@fnnews.com Seo Min-ji Reporter