Investor deposits, which once were poised to top 140 trillion won, fell into the 100 trillion won range. As volatility intensified—with the KOSPI rising more than 6% in a day and then dropping more than 7% the next day—investors fatigued by the swings appear to have begun shunning the domestic stock market.
According to the Korea Financial Investment Association on the 19th, investor deposits totaled 109.867 trillion won on the 15th. That is a decline of more than 21% compared with early June, when the KOSPI topped 8,000 and the figure stood at 139.6948 trillion won, and it even fell to around 106 trillion won on the 10th.
Investor deposits, the cash investors keep on hand to buy stocks, dropped below 120 trillion won early this month and have hovered around 110 trillion won. The level is similar to early April, when fear spread across the market as the Iran war entered a prolonged phase.
Analysts say investors worn out by volatility are pulling out of the market. In fact, the KOSPI has been repeatedly surging or plunging by more than 5% this month. On the 13th, the index fell more than 10% from the previous day. It then rose 6% on the 15th and dropped another 7% on the 16th.
Some expect individuals to further exit the domestic market. After the Bank of Korea raised the base rate in the second half for the first time in three and a half years and effectively signaled additional hikes, funds may shift to savings and time deposits.
An official at a financial investment firm said, "As deposit rates rise amid a base rate hike and market volatility increases, cash on the sidelines is flowing out," and added, "The decline in deposits will likely continue until volatility subsides and the index's direction becomes clear."