Surge in KOSPI Rally Draws a Flood of Idle Funds... Investor Deposits Return to Record High

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[Financial News] As the KOSPI Composite Index extended its record-setting rally, investor deposits, the cash waiting on the sidelines for stock market entry, swelled to an all-time high.
According to the Korea Financial Investment Association (KOFIA) on the 10th, investor deposits stood at 136.989 trillion won as of the 7th, setting a new record. The amount jumped by more than 28 trillion won in just one month.
Investor deposits refer to money that investors leave in securities accounts to buy stocks, or funds left unwithdrawn after selling shares. Because they can flow into the market at any time, they are classified as idle funds waiting to enter the stock market. In general, when expectations for stock price gains rise, these waiting funds also increase.
Investor deposits first surpassed 130 trillion won on March 4, when they reached 132.0682 trillion won. But as the stock market wavered on the impact of the war between the United States and the Islamic Republic of Iran, the balance steadily declined and fell to 107.4674 trillion won on the 6th of last month.
As the market recovered quickly, investor deposits also rose sharply. On the 6th, they climbed back above 130 trillion won for the first time in two months, and just one day later they rose by more than 6 trillion won to set a new record.
So far this year through the 7th, the average daily amount of investor deposits has reached 110.4737 trillion won. That is up 68% from last year's daily average of 65.7374 trillion won.
As investors have been entering the stock market more actively, the scale of borrowing to invest, known as "debt investing," has also remained at a high level. As of the 7th, the balance of margin loans stood at 35.5072 trillion won, up by about 2.8 trillion won in a month. It is also close to the all-time high of 36.0682 trillion won, set on the 29th of last month.
The margin loan balance refers to the amount investors have borrowed from securities firms to buy stocks and have not yet repaid. It is an indicator that helps gauge the scale of individual investors' borrowing to invest. In general, a rising balance is interpreted as a sign of stronger expectations for index gains.
The active entry of investors into the stock market is also reflected in account numbers. As of the 7th, the number of active stock trading accounts stood at 105.45 million, up by 7.16 million this year alone. That is well above half of last year's full-year increase of 11.72 million.
Active stock trading accounts refer to brokerage and securities savings accounts with assets of at least 100,000 won and at least one transaction in the past six months. They include general stock accounts as well as Individual Savings Accounts (ISA), Reshoring Investment Accounts (RIA), and Integrated Investment Accounts (IMA).
Brokerages expect the rally to continue on the back of earnings momentum. Lee Kyung-min, a researcher at Daishin Securities, said, "Even as the KOSPI Composite Index attempts to break through the 7,500 level, the forward price-earnings ratio (PER) is only 7.66 times. If a PER of 9 times is applied, it would reach 8,800. We should take into account short-term overheating and a phase of supply absorption, but the record-high run of the KOSPI Composite Index will likely repeat as valuation normalizes based on earnings."
Some also say that although Samsung Electronics Co., Ltd. and SK hynix continue to dominate the market, rotation into other sectors will gradually ease the concentration. Jongmin Kim, a researcher at Samsung Securities, said, "Funds are likely to move into broader AI beneficiaries, including semiconductor materials, parts and equipment, alternative energy, and Physical AI. While the index's upward momentum may slow somewhat, the overall quality of the market and its resilience on the downside will likely strengthen."
jisseo@fnnews.com Reporter Seo Min-ji Reporter