"I’ll Only Take 5%" Money Pours In, But PB Says the Wealthy Are Hoarding Cash and Reconsidering the Timing for Bargain Buys

[Financial News] As volatility has surged recently, with KOSPI (Korea Composite Stock Price Index) plunging to the 7,200 level, an analysis has found that more investors are turning to bank deposits, a principal-protected product.

According to News 1 on the 9th, the time deposit balance at the five major banks — KB, Shinhan, Hana Bank, Woori Bank and NACF — stood at 962.7009 trillion won as of the 7th. That was the highest level in about seven months, since November last year, when the figure reached 971.9897 trillion won. Notably, the balance jumped by more than 1.3 trillion won in just one week compared with the end of June, when it stood at 949.3998 trillion won.
As more investors grow weary of stock market volatility, and banks raise deposit rates to prevent funds from leaving, demand for safe assets is rising again. With the stock market recently entering a correction, deposits are seen as becoming more attractive on a relative basis.
KOSPI had repeatedly hit record highs, rising intraday to 9,385.59 on June 19, but it fell back to the 7,200 range in less than a month, widening volatility. By contrast, deposit rates also rose during the same period as market interest rates increased.
Current deposit rates at commercial banks are in the 3% range, while some savings banks are offering nearly 5%. The highest rates for 12-month time deposits at first-tier banks were found to range from 2.40% to 3.83% annually. Gwangju Bank’s “Good Start Deposit” offers 3.83%, Standard Chartered Bank Korea Limited’s “e-Green Save Deposit” offers 3.75%, and THE JEONBUK BANK LTD.’s “JB 123 Time Deposit” offers 3.75%. Among the five major banks, Shinhan Bank’s “Shinhan My Plus Time Deposit” offers the highest rate at 3.30%.
For savings banks, the average 12-month time deposit rate is around 3.94% per year. According to disclosures by the Korea Federation of Savings Banks, products such as YeGaram Savings Bank’s “e-Rotation Time Deposit” at 4.60% and HB Savings Bank’s “e-Rotation Time Deposit” at 4.51% are drawing funds with rates approaching 5%.

However, some analysts say it is still difficult to conclude that idle stock market funds are making a full-scale return to banks in a so-called reverse money move. Time deposit balances at banks include not only individual funds but also corporate money, and deposits from large firms such as securities companies and semiconductor companies have recently increased sharply. That means it is not possible to say with certainty that retail investors’ stock-sale proceeds have moved into deposits.
In particular, among actual high-net-worth investors, there are signs that this correction is being viewed as a buying opportunity. A private banker (PB) at a commercial bank in Gangnam said, "Both U.S. and domestic stocks are undergoing price corrections, led by the semiconductor sector, but wealthy clients are not trying to dramatically increase their deposit allocation." The PB added, "Instead, they are holding cash and reconsidering the timing for bottom fishing, and their preference for core sectors such as semiconductors remains intact."
bng@fnnews.com Kim Hee-sun Reporter