As the KOSPI index topped the 5,000 mark for the first time ever, funds surrounding the stock market have also swelled to a record scale. Not only investor deposits, the cash waiting on the sidelines, but also margin balances for stock credit transactions are hitting a record high day after day.
According to the Korea Financial Investment Association on the 25th, investor deposits stood at 95.7275 trillion won as of the 22nd. After surpassing 90 trillion won for the first time early this month, the figure has continued to rise, growing to near 100 trillion won. Investor deposits are funds that investors leave in securities firm accounts for stock and fund transactions, and they tend to increase as expectations for stock price gains rise.
The sharp rise of the KOSPI index appears to have spurred inflows. On the 22nd, the KOSPI climbed intraday to 5,019.54, breaking above 5,000 for the first time ever, and it has since maintained a firm tone near its highs. After the KOSPI index surged more than 75% last year and the uptrend showed no sign of stalling in the new year, analysts said "FOMO," the fear of missing out, has stoked risk appetite as investors worry about being left out of the rally.
So-called "bit-too," or investing in stocks with borrowed money, is also rising quickly. The combined margin balance for stock credit transactions on the KOSPI and KOSDAQ was 28.9257 trillion won as of the 22nd. After topping 28 trillion won this month, it hit a record high of 29.0821 trillion won on the 21st. Transaction value has also jumped. Since January, the average daily transaction value on the KOSPI and KOSDAQ markets has been about 38.5 trillion won, up more than 130% from the same month last year.
Along with the rising index, the simultaneous climb in a volatility gauge is cited as a risk for the market. The KOSPI 200 Volatility Index (VKOSPI), known as a fear gauge, stood at 34.09 as of the 23rd, up about 10 points from a month earlier (26.11). VKOSPI typically rises during sharp market sell-offs, but lately it has shown the unusual pattern of climbing even as the index rises. In the market, a VKOSPI in the 20s is viewed as a normal range, while 30 and above is seen as a high-volatility zone.
Still, some say excessive caution should be avoided because expectations for earnings improvement are underpinning the index's rise. As corporations' earnings estimates have been revised higher recently, valuation metrics such as the price-earnings ratio (PER) have in fact declined.
Meanwhile, separate from the heat in the domestic stock market, the craze for investing in overseas stocks has not cooled. This month, individual investors were net sellers of domestic stocks, while they made large net purchases of U.S. stocks. According to the Korea Securities Depository (KSD), from the 1st to the 22nd this month, individual investors' net purchases of U.S. stocks reached $3.62 billion. Preference for overseas investments centered on U.S. big tech and high-return products remains strong, observers said.