As the KOSPI index surpasses the 9,000 mark for the first time, a significant shift of funds from banks to the stock market is underway, accelerating the trend known as "money moves." Despite concerns over instability in the Middle East and rising interest rates, the stock market remains robust, prompting not only idle cash but also funds previously tied up in savings accounts to flow into equities.
According to the Bank of Korea's Economic Statistics System (ECOS), the turnover rate of demand deposits at domestic banks reached 23.1 times in April, an increase of 4.9 times from 18.2 times in April of the previous year. The turnover rate peaked at 23.6 times in December last year, the highest in a decade, and has remained above 23 times for two consecutive months since March.
The deposit turnover rate, calculated by dividing the amount of deposits withdrawn by the average balance, indicates that more money is actively moving from savings accounts into investments like stocks. While the stock market is experiencing unprecedented growth, bank deposit interest rates remain in the 2-3% range, suggesting a significant migration of idle funds.
The turnover rate for savings deposits, which includes regular savings and time deposits, also reached a record high of 1.7 times in April, matching the previous highs of December last year and March this year. This indicates that even funds that have been tied up for longer periods are being redirected to other investment opportunities.
The KOSPI index, according to the Korea Exchange, surpassed 9,000 for the first time on June 18 and closed at 9,052.42 on June 19, marking a year-to-date increase of 114.81%. The KOSPI200 index, which reflects the performance of large-cap stocks, also recorded a 140.85% increase during the same period.
In contrast, the one-year fixed deposit interest rate at banks was only 3.04% as of April, a modest increase of 0.2 percentage points from 2.94% at the end of January.
As a result, there has been a notable influx of funds into exchange-traded funds (ETFs) for stock investments within banks. The five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reported a total ETF sales volume of 56.73 trillion won this year, a staggering 10.8 times increase compared to 5.21 trillion won during the same period last year.
Market analysts believe that this trend of money moves is likely to continue. Typically, when interest rates rise, funds tend to stay in banks; however, the current stock market boom is offsetting the effects of rising rates, leading to a one-sided outflow of funds.
A financial industry official stated, "In the past, when deposit rates increased, funds would flow into banks, but recently there has been a clear trend of money moving into higher-yielding investment assets. If the stock market continues to rise, the movement of funds from savings accounts to the stock market is likely to persist for the time being."
According to the Bank of Korea's Economic Statistics System (ECOS), the turnover rate of demand deposits at domestic banks reached 23.1 times in April, an increase of 4.9 times from 18.2 times in April of the previous year. The turnover rate peaked at 23.6 times in December last year, the highest in a decade, and has remained above 23 times for two consecutive months since March.
The deposit turnover rate, calculated by dividing the amount of deposits withdrawn by the average balance, indicates that more money is actively moving from savings accounts into investments like stocks. While the stock market is experiencing unprecedented growth, bank deposit interest rates remain in the 2-3% range, suggesting a significant migration of idle funds.
The turnover rate for savings deposits, which includes regular savings and time deposits, also reached a record high of 1.7 times in April, matching the previous highs of December last year and March this year. This indicates that even funds that have been tied up for longer periods are being redirected to other investment opportunities.
The KOSPI index, according to the Korea Exchange, surpassed 9,000 for the first time on June 18 and closed at 9,052.42 on June 19, marking a year-to-date increase of 114.81%. The KOSPI200 index, which reflects the performance of large-cap stocks, also recorded a 140.85% increase during the same period.
In contrast, the one-year fixed deposit interest rate at banks was only 3.04% as of April, a modest increase of 0.2 percentage points from 2.94% at the end of January.
As a result, there has been a notable influx of funds into exchange-traded funds (ETFs) for stock investments within banks. The five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) reported a total ETF sales volume of 56.73 trillion won this year, a staggering 10.8 times increase compared to 5.21 trillion won during the same period last year.
Market analysts believe that this trend of money moves is likely to continue. Typically, when interest rates rise, funds tend to stay in banks; however, the current stock market boom is offsetting the effects of rising rates, leading to a one-sided outflow of funds.
A financial industry official stated, "In the past, when deposit rates increased, funds would flow into banks, but recently there has been a clear trend of money moving into higher-yielding investment assets. If the stock market continues to rise, the movement of funds from savings accounts to the stock market is likely to persist for the time being."
* This article has been translated by AI.
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