In 2024, the transaction volume of domestic stocks by securities firms decreased, while the transaction volume of foreign stocks increased significantly. This is interpreted as a result of individual investors leaving Korea to rush into the U.S. stock market.
According to data collected by Kim Hyun-jung, a member of the ruling Democratic Party, from the Financial Supervisory Service and nine securities firms (Mirae Asset, Hanwha Investment & Securities, Samsung, Kiwoom, NH, KB, Shinhan, Toss, Kakao Pay Securities) on the 6th, the combined transaction volume of domestic stocks by these securities firms (the stocks bought and sold by individual investors) was 635.254 billion shares, down about 13% from the previous year (730.379 billion shares). This is a decrease of 48.3% compared to 2021 (1.228 trillion shares), when a stock investment boom followed COVID-19.
In contrast, the transaction volume of foreign stocks increased significantly. The transaction volume of foreign stocks rose from 59.31 billion shares in 2022 to 112.435 billion shares in 2023, a jump of 89.6%, and reached 156.419 billion shares last year, an increase of 39.1%.
Although the government has been implementing a value-up policy since early last year, one of the reasons individual investors have opted for what is termed "Director General escape" is that the domestic stock market results have been among the weakest compared to major countries. Ongoing corporate governance issues that undermine the interests of minority shareholders, such as Doosan Group's restructuring and Korea Zinc's surprise public offering, have also contributed.
Last year, the KOSPI fell 9.43% over the entire year, while the KOSDAQ index dropped 23.15%. During the same period, the U.S. Standard & Poor's 500 index rose 26.58%, and the NASDAQ index gained 33.37%. The Japanese Nikkei 225 index also increased by 20.37%, and both the Shanghai Composite index and the Hang Seng index in Hong Kong rose by 14.26% and 17.82%, respectively.
As transactions of foreign stocks have increased, the revenue landscape for securities firms has changed. Last year, the foreign exchange commission revenue of nine securities firms was 269.659 billion won, an approximately twofold increase from the previous year (129.416 billion won).
The trusteeship commission for foreign stocks also increased. In the first three quarters of last year, the revenue from trustee commissions for foreign stocks reached 810.9 billion won, a 33.8% increase compared to the total of the previous year (606.1 billion won). During the same period, the revenue from trustee commissions for domestic stocks was 1.8175 trillion won, which is 76.2% of the total from the previous year (2.3853 trillion won).
Kim Hyun-jung noted, "While the government has proposed a value-up policy to stimulate the domestic stock market, the lack of trust from investors is accelerating the outflow of funds to foreign markets. Now is the time for fundamental reform of the capital market rather than merely lifting stock prices."
Kim also added, "A comprehensive plan should be established to improve corporate governance and enhance investor protection to create a market environment that is investor-friendly and conforms to global standards."