Korean Stock Market Volatility Leads to Capital Flow Back to Banks, Time Deposits Increase by 24.09 Trillion Won

The recent volatility in the South Korean stock market has heightened, leading to a decrease in investors' risk appetite and a flow of funds back to banks and other safe assets. Due to adjustments in the semiconductor sector and stricter regulations on leveraged investments, a phenomenon of "reverse capital migration" has emerged in the market. Data shows that as of the end of July, the balance of time deposits at the five major banks in South Korea (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reached 973.49 trillion won, an increase of 24.09 trillion won from the end of the previous month, marking the largest monthly increase this year. Funds around the stock market have also significantly contracted. According to the Korea Financial Investment Association, the deposits in investors' securities accounts (funds available for stock trading) peaked at a historical high of 139.69 trillion won on June 4, but had dropped to 107.20 trillion won by July 28, a decrease of over 32 trillion won. The balance of credit trading financing, which represents the scale of market financing transactions, also fell to 33.19 trillion won during the same period, down approximately 4.5 trillion won from the peak of 37.72 trillion won recorded on July 2, a decrease of about 12%.

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