SEOUL, Korea, Feb 21 (Korea Bizwire) – As the KOSPI is exhibiting high volatility this year to date, individual investors are leaving the market in droves. The deposit balance with securities firms by investors has fallen to the level of 13 trillion won, a three-year low, and is showing little signs of regaining. Investors with deep pockets are moving toward safer investment destinations or overseas assets that promise higher returns.
According to the Korea Financial Investment Association on February 20, the balance of investors’ deposits as of the 17th was 13,744.9 billion won. The balance had been in the range of 17 to 19 trillion won last year. Since September last year when the KOSPI went up to the 2,000 level, however, the balance has continuously declined to the 13-trillion-won level.
Accordingly the transaction volume has dropped precipitously. As of February 18, the daily transaction amount in the KOSPI market was 2.7 trillion won, almost a half of what it used to be only four years ago in 2010 when the corresponding figure was 5.3 trillion won.
Individual investors are also staying away from fund investment as well. As of the end of last year, the balance of stock funds invested by individuals was 55,099.6 billion won, down 54 percent from 119,168.1 billion at the end of 2008. During the same period, the share of balance by individual investors fell 17.52 percentage points to 34.15 percent from 51.67 percent.
Individual investors are now turning their attention to demand deposits. According to the Bank of Korea, the balance of demand deposits including ordinary deposit accounts has increased 12.2 percent to 119,677.4 billion won as of the end of 2013 from 105,084.9 billion won a year ago. The money market fund balance is rising rapidly as well. As of the end of December 2013, its balance was 66,400.9 billion won, up 4.9 percent a year ago. As of February 17, the balance has again increased to 84,374.6 billion won, 21.3 percent higher than the end of 2013.
Meanwhile, some investors are moving overseas to look for higher returns. According to the Korea Securities Depository, the volume of foreign securities settlement balance last year was US$22,426 million, up 18 percent from a year ago. That means there are more domestic investors putting money in overseas stocks and bonds. As the investment to U.S. markets increases rapidly, the settlement volume last year almost tripled to $4,740 million from $1,663 million in 2012.