As KOSPI has swung sharply since July, even investor deposits, the stock market's wait-and-see cash, are shrinking fast. The average daily investor deposits last month plunged by nearly 20 trillion won from the previous month.
This is about 10 trillion won less than in March, when KOSPI underwent a correction amid military clashes between the United States and Iran. Even individual investors, who had propped up the downside whenever the market wobbled, are leaving the market.
According to statistics from the Korea Financial Investment Association on the 3rd, investor deposits stood at 104.6584 trillion won on the 30th of last month, when the KOSPI index was recorded. That is a drop of more than 35 trillion won in about two months since marking a record high of 139.6948 trillion won on June 4.
Investor deposits are funds that investors place in securities firm accounts to buy stocks. The larger this pool, the higher the likelihood that market liquidity will increase. When deposits shrink, the market's supply-demand momentum inevitably weakens.
The problem is that as KOSPI has whipsawed since July, even the market's wait-and-see cash is being depleted quickly. Even in March, when KOSPI slid to the 5,000 level due to the fallout from the U.S.-Iran clash, deposit conditions were better than now.
The average daily investor deposits in July were 109.9174 trillion won, a sharp drop of about 20 trillion won from the previous month (129.8417 trillion won). That is 10 trillion won less than in March (119.6237 trillion won), when war risks erupted.
The attitude of individual investors toward a falling market has also changed. On March 4, when KOSPI plunged 12.06%, deposits increased by 2 trillion won in a single day to 132.0682 trillion won as bargain hunting flowed in. In contrast, on the 28th, when the index slumped 10.84%, deposits actually fell by 2 trillion won to 107.1994 trillion won.
In fact, individual investors' buying has shriveled rapidly since July. This month, individuals posted net purchases of 13.797 trillion won in the domestic stock market. That is about 26 trillion won less than the previous month (39.54 trillion won). It also declined by 19 trillion won compared with March (32.842 trillion won).
Forced liquidations triggered by the index plunge also poured out. From the 28th to the 30th, when KOSPI crashed 17%, the actual forced-sale amount versus margin shortfalls reached 178.8 billion won. The volume forced to be disposed of increased because collateral ratios were not met. Cumulative forced-sale amounts in July swelled to 766.8 billion won.
Margin shortfalls are also on the rise. As of the 30th, margin shortfalls stood at 1.7249 trillion won, up more than 500 billion won from the 1.2 trillion won range on the 28th–29th.
Lee Sang-heon, Director General of iM Securities' research center, said, "The decline in investor deposits suggests a significant portion of investors have left the stock market," and noted, "Funds may have flowed to banks or elsewhere."