A company employee in his 50s, a person surnamed Kim, recently terminated 2 billion won in savings he had set aside to increase his child's apartment floor space and moved the entire amount into a stock account. Kim said, "In the past, I thought a bigger home was always the best, but these days the pace of asset growth is much faster if you hold Samsung Electronics or semiconductor exchange-traded funds (ETF)," adding, "Many people around me have sold their homes and increased the share of stocks to 60%–80% or more."
As the KOSPI breaks through the 7,000 level, the paradigm of Korean household asset building is being upended. The "real estate can't lose" myth that any spare cash should be buried in property is fading, and the "money move" phenomenon—in which home purchase standby funds and bank deposits flow en masse into the stock market—is accelerating.
According to the Korea Financial Investment Association on the 6th, investor deposits stood at 129.7321 trillion won as of Apr. 29 this year. This is the highest level in about two months since Mar. 6 (129.9574 trillion won). Investor deposits are funds customers leave with securities firms to buy stocks and are classified as a key pool of stock market standby money.
Individual investors' fervor is clearly visible in the "bit-too" figures for investing with borrowed money. The balance of margin lending stood at 35.6895 trillion won as of Apr. 28 this year, hitting a record high. In this month alone, it surged by 2.7 trillion won, showing investor sentiment peaking as they try to jump on the bull market.
Time deposits at commercial banks, a symbol of safe assets, have clearly lost momentum. According to the Economic Statistics System (ECOS) of the Bank of Korea, as of the end of last year, the number of time deposit accounts with 100 million won or less totaled 21,629,000. This is the lowest since the first half of 2019. The deposits within those accounts also fell to 299.709 trillion won, ending a growth streak that lasted three years and six months. It is interpreted that investors who had chosen deposits terminated them and jumped en masse into the stock market.
The government is pursuing all-out policies to shift household assets concentrated in real estate and other nonfinancial assets into financial assets. Creating the Public Growth Fund, revitalizing commercial paper and individual management accounts (IMA), and introducing business development companies (BDC) are cited as representative examples.
With the domestic stock market's record-breaking strength coinciding with the money move, the outflow from bank savings and installment savings assets is expected to accelerate further. In particular, as the government tightens regulations on real estate lending, the likelihood increases that the massive standby funds unable to purchase dwellings will flow into the stock market, bolstering the analysis that the center of gravity in the asset market is shifting completely from real estate to stocks.
Experts said this money move is not merely an exodus from bank deposits, but is accompanied by a "qualitative change" in household and corporations assets.
Lee Sang-yeon, a researcher at Shinyoung Securities, said, "As investment vehicles based on tax benefits such as retirement pensions and individual savings accounts (ISA) have increased, and as the indirect investment market centered on ETFs has grown, the paradigm of personal asset management is changing," adding, "On top of that, with the government's stance of revitalizing the capital market, personal funds are quickly moving from direct investment to indirect investment."
Lee Jin-woo, head of research at Meritz Securities, said, "If the source of the 'new money' flowing into the stock market is deposits, the funds already in accounts are moving into much more aggressive investment products."
Lee particularly emphasized that the change is pronounced in the retirement pension market. As the shift in weighting accelerates from defined-benefit (DB) plans focused on principal-and-interest protection to defined-contribution (DC) plans that are investment products, trading ETFs via retirement pensions is serving as a massive downside support for the stock market.
According to the financial investment industry, retirement pension reserves at the end of the first quarter this year totaled 508.7 trillion won. That is up about 12 trillion won (2.4%) from the end of last year.
By type, DC plans and individual retirement pensions (IRP) increased. DC plans stood at 143.2 trillion won, up 6.2 trillion won (4.5%) from the previous quarter, and IRPs rose to 143.7 trillion won, up 9.8% (12.9 trillion won). In contrast, DB plan reserves fell to 221.8 trillion won, down 7.1 trillion won (3.1%).
Lee said, "Recently, as corporations have been using corporate funds to pursue aggressive investments, the flow of money market funds (MMF) has also become a key indicator showing a virtuous cycle in the stock market," adding, "Not only households but also corporate funds are flowing into the capital market, acting as a source of vitality for the market."