Expectations that the KOSPI will break above 7,000, along with forecasts of a rally in large-cap technology shares, are accelerating the shift of money from bank deposits into the stock market. Analysts say the trend reflects a clearer move away from deposit-centered asset management as investors chase higher returns.
According to the Bank of Korea’s Economic Statistics System, the number of time-deposit accounts at commercial banks with balances of 100 million won ($72,000) or less totaled 21,629,000 at the end of last year. That was the lowest since the end of the first half of 2019 (20.7 million). The figure fell 3.2% from the end of the first half of last year (22,334,000) and 3.1% from the end of 2024 (22,330,000).
The total amount held in those sub-100 million won time deposits also slipped. The balance stood at 299.709 trillion won at the end of last year, down 2.2% from a year earlier (306.528 trillion won). After rising for three years and six months and hitting a record at the end of the first half of last year (308.333 trillion won), the uptrend reversed.
Most time deposits under 100 million won are believed to be held by individuals. Banks say the decline reflects a recent personal-finance trend in which retail investors are moving beyond deposits and taking a more active approach to investing.
For similar reasons, demand deposits—often treated as cash waiting to be invested—have been swinging sharply. At the five major banks (KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup), demand-deposit balances were 699.9081 trillion won at the end of March, fell to 680.9236 trillion won on April 16, then rebounded to 700.6712 trillion won at the end of April, showing nearly 20 trillion won moving out and back in within about two weeks.
Analysts attribute the pattern to money flowing heavily into stocks as the KOSPI repeatedly set new highs, then returning to banks at month-end as investors rebuilt cash positions.
A key gauge of leveraged stock buying in Korea—outstanding margin loans—has also set fresh records. Margin loans refer to money investors borrow from brokerages for stock purchases that has not yet been repaid. The balance first topped 35 trillion won on April 23, then hit another high five days later on April 28 (35.6895 trillion won). It has risen for 13 straight trading sessions since April 10 and is up 2.7 trillion won so far this month.
The shift is expected to persist for now, with bank deposit rates stuck in the 2% range and the KOSPI pushing higher day after day, lifting expected returns. Global investment banks have raised their KOSPI forecasts sharply, to as high as 8,500, adding to the flow of funds.
A commercial bank official said that in the past, people tended to park lump sums in time deposits, but now they are increasingly moving money frequently based on market conditions. The official added that the pace of transfers has quickened alongside the recent stock-market rise.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.