"If You Don't Buy Now, You'll Regret It for the Rest of Your Life" ... Retail Investors Rush Into Stocks, Borrowing 700 Billion Won in Just 3 Days

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[Financial News]  As the domestic stock market has been setting record highs day after day, fear of missing out, or FOMO, is spreading among investors who worry they may be left behind in the rally. Retail investors are turning to borrowing, including overdraft credit lines, to jump into the stock market, and bank loan balances are surging as a result.
According to the financial sector on the 10th, the actual outstanding balance of overdraft credit lines used by customers at the five major commercial banks — KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and Nonghyup Bank — stood at 40.5029 trillion won as of the 7th.
That is an increase of 715.2 billion won in just three business days from the end of April, when the balance stood at 39.7877 trillion won. Based on month-end balances, it is the largest level in about 3 years and 4 months, since 40.5395 trillion won at the end of January 2023.
The pace of growth is also steep. The 715.2 billion won increase in just three business days this month is the largest monthly increase since October 2023, when the balance rose by 872.6 billion won. After falling to the 39 trillion won range earlier this year on year-end bonus inflows and other factors, overdraft balances are expanding rapidly again amid the recent KOSPI Composite Index rally.
As individual investors pour money into the stock market, banks' standby funds are drying up quickly.
The five major banks' demand deposits, which are funds that temporarily sit idle while looking for an investment destination, came to 696.0511 trillion won as of the 7th. That was down 501.3 billion won from the end of April, when the balance stood at 696.5524 trillion won. After 3.3557 trillion won flowed out in April alone, the outflow trend has continued for two straight months.
Banks say the unusual strength in the stock market, including the KOSPI Composite Index breaking through the 7,500 level, is the direct cause of this shift in funds. They add that anxiety about missing the rally is driving aggressive investing through short-term credit loans.
A commercial bank official explained, "Since the KOSPI Composite Index surged, there has been a clear trend of individual investors drawing on short-term liquidity such as overdraft credit lines to invest in stocks."
The official added, "As the threshold for mortgage lending has risen due to tighter household debt management last year, we believe demand from borrowers trying to cover shortfalls in housing funds or living expenses with credit loans, a kind of balloon effect, has also partly contributed to the increase in balances."
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moon@fnnews.com Moon Young-jin Reporter