Retail traders hold record-high deposits of W72tr: data

Retail investors’ deposits for stock investments reached a record 72.3 trillion won ($66 billion) as of Monday, according to the Korea Financial Investment Association, a self-regulatory organization for the financial sector, Wednesday.

It is the first time that the outstanding deposits for stock investment crossed the 70 trillion won mark since related data started to be compiled in 1998. The outstanding balance, which came in at 67.5 trillion won last Friday, added a whopping 4.8 trillion won on Monday.

The increased deposits suggest that retail investors strongly expect the equity market, backed by strong liquidity, to continue to rise. From Jan. 3 to 12, individual investors bought a total of 8.5 trillion won worth of stocks.

“It is quite surprising to see deposits held by retail investors not running out yet after a series of buying sprees since last year,” said Lee Jae-sun, an analyst from Hana Financial Investment. “Their buying mode will likely continue down the road, considering high liquidity in the market.”

After buying a record 4.5 trillion won worth of stocks Monday, retail traders purchased 2.3 trillion won worth of stocks the following day.

So far this year, individual traders have been net buyers most of the time while institutional investors and foreign investors have turned to net sellers.

“With the increased clout of individuals over the market, investors now need to keep an eye on factors linked to those small investors, such as changes in stock trading deposits,” said Seol Tae-hyeon, an analyst at DB Financial Investment.

Riding the momentum created last year in the market, the nation’s benchmark Kospi surpassed 3,100 points last Friday, surging 30 percent in just three months. In October, it hovered around the 2,400 level. The Kospi’s rally continued this week as it hit a fresh high of 3,266.23 during Monday’s intraday session, suggesting its potential to go further up, particularly with the record-high deposits held by individual investors, according to market observers.

The amount of loans for stock investment has also increased. The outstanding balance of loans taken out by individual investors came in at a record 20.5 trillion won on Monday.

By Kim Young-won (wone0102@heraldcorp.com)