Korean Stock Market Volatility Triggers "Reverse Fund Migration": Over 24 Trillion KRW Flows into Time Deposits at Five Major Banks

Odaily News: The Korean stock market has recently experienced heightened volatility, with investor risk appetite notably cooling and funds flowing back from equities into safe-haven assets such as banks. Due to adjustments in the semiconductor sector and stricter leverage trading regulations, standby investment funds in the Korean stock market have rapidly withdrawn, giving rise to a "reverse fund migration" phenomenon in the market.

Data shows that as of the end of July, the time deposit balances at South Korea's five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reached 973.49 trillion KRW, an increase of 24.09 trillion KRW from the end of the previous month, marking the largest single-month gain so far this year.

Funds surrounding the stock market have also contracted significantly. According to data from the Korea Financial Investment Association, investor securities account deposits (standby funds for stock trading) peaked at 139.69 trillion KRW on June 4, but had fallen to 107.20 trillion KRW by July 28, a decline of more than 32 trillion KRW in less than two months. Meanwhile, the credit transaction financing balance, which represents the scale of margin trading in the market, dropped to 33.19 trillion KRW during the same period, down approximately 4.5 trillion KRW—or about 12%—from the peak of 37.72 trillion KRW recorded on July 2. (Daum)