The center of gravity in Korea's asset market is shifting rapidly from real estate to the stock market. As the KOSPI index breaks through the 5,300 level and continues a rally close to a "frenzy" day after day, the domestic market capitalization has chased up to 70% of the market capitalization of dwellings.
According to the Korea Exchange (KRX) information data system on the 5th, as of the 4th, the KOSPI market capitalization stood at 4,439 trillion won and the KOSDAQ market capitalization at 630 trillion won. Combined, the two markets reached 5,069 trillion won.
Since the start of the year, KOSPI–KOSDAQ market capitalization has surged. As of the 2nd of last month, the KOSPI market capitalization was 3,559 trillion won, and KOSDAQ was 516 trillion won, totaling 4,075 trillion won. In just 23 trading days, it increased by nearly 1,000 trillion won, topping 5,000 trillion won.
Thanks to the ongoing bull run in the domestic stock market this year, the gap between KOSPI–KOSDAQ market capitalization and the market capitalization of dwellings is also expected to have narrowed sharply.
According to the Bank of Korea, as of the end of 2024, the market capitalization of dwellings was tallied at 7,158 trillion won. The market capitalization of dwellings means the total value of all dwelling prices in Korea. Based on this, the KOSPI–KOSDAQ market capitalization has risen to 71% of the "housing price market capitalization."
As of 2024, KOSPI–KOSDAQ market capitalization was 2,303 trillion won, only 32% of the market capitalization of dwellings. Although the market capitalization of dwellings is also expected to have risen to some extent in line with last year's real estate market recovery, the explosive rally in stocks has overwhelmed it, and the gap between the two asset groups is expected to have narrowed significantly.
Such a steep increase in market cap suggests that the household asset structure, which had relied on the "real estate never fails" belief, is rapidly being reorganized into risk assets such as stocks. In particular, an increase of 1,000 trillion won in just over 20 trading days is an explosive growth rate rarely seen in the past.
However, Lee Sang-heon, senior research fellow at iM Securities, said, "KOSPI–KOSDAQ market capitalization has grown quickly, but what matters now is sustainability," and noted, "Even as the U.S. stock market declines, the domestic market is maintaining an upward trend through individual net buying and individual exchange-traded fund (ETF) investments."
Meanwhile, signs of a money move from banks to the stock market are also being detected. As of the 29th of last month, demand deposits at the five major banks totaled 643.2634 trillion won. This is down 30.7450 trillion won from 674.0084 trillion won at the end of last year. In contrast, investor deposits, the stock market's ready funds, hit a record high, surpassing 110 trillion won on the 2nd.