Investor Deposits Top 100 Trillion Won Again as Retail Investors Rebuild Their Cash Pile

[Financial News] As the KOSPI (Korea Composite Stock Price Index) has risen for five straight trading days, waiting funds for the stock market are also recovering. According to the Korea Financial Investment Association on the 16th, Investor Deposits, excluding exchange-traded derivatives margin deposits, stood at 100.0683 trillion won as of the 13th.
Investor Deposits refer to cash held in securities accounts that has not yet been invested in stocks or other assets. They are seen as standby funds that could flow into the market.
In June, when the KOSPI broke above the 9,000 level, Investor Deposits came close to 140 trillion won. But after the index plunged, the figure briefly fell below 100 trillion won on the 11th and 12th of this month. The 97.9289 trillion won recorded on the 11th was the lowest level of the year.
However, as the market rose for five consecutive trading days from the 10th to the 14th, Investor Deposits also moved higher. As of the 13th, deposits had increased by 2.1398 trillion won in just two trading days from the year’s low on the 11th.
In particular, individual investors net sold 580.87 billion won in the domestic stock market on the 12th and 13th, leaving part of those proceeds in securities accounts. That appears to have helped boost deposits. Retail investors also net sold 182.37 billion won on the 14th, suggesting that Investor Deposits may continue to recover in the short term.
Short-term idle funds are also rising sharply. As of the 13th, Money Market Fund (MMF) balances reached 262.9677 trillion won, the highest this year. Cash Management Account (CMA) balances stood at the 102 trillion won range, while securities firms’ customer repurchase agreement (RP) sales balances were in the 123 trillion won range, bringing nearby short-term standby funds to 588 trillion won.
Still, opinions are divided over whether the recovery in standby funds will signal a broader rebound in the domestic stock market. Even after the recent rebound, Investor Deposits remain about 40 trillion won below their peak of nearly 140 trillion won.
Some analysts also say individual investors have become more focused on short-term trading than on following the broader uptrend. Even during last week’s rally, retail investors net sold 675.46 billion won in the domestic stock market.
Lee Jae-won, a researcher at Yuanta Securities Korea Co., Ltd., said, "Since the 31st of last month, strong up days have repeatedly seen foreigners buying net and individuals selling net, while sharp declines have seen foreigners selling net and individuals buying net." He added, "Individual flows are shifting away from trend-following and toward buying on dips during corrections and taking profits on rebounds."
An official from the financial investment industry said, "Retail investors who have gone through an unprecedented slump, with major domestic stocks such as Samsung Electronics and SK hynix falling by as much as half from their peaks, seem eager to exit now that their holdings are rebounding." The official added, "Investor sentiment is unlikely to recover for some time unless the KOSPI shows a sustained uptrend."
Lee also said, "For the KOSPI’s rally to continue, a return to sustained net buying by foreign investors is crucial."
[email protected] Han Young-jun Reporter