In the first quarter of this year, South Korea's stock market outperformed major countries, leading to a shift of household funds into stock investments. Corporate surplus reached a record high, bolstered by a strong semiconductor market.
Households have shown a trend of moving funds from bank deposits to stock investments, a phenomenon referred to as 'money move,' while the household debt-to-GDP ratio has dropped to the 85% range.
According to the Bank of Korea's '2026 Q1 Fund Circulation (Preliminary)' statistics released on July 7, the net fund management amount for households (including individual businesses) and non-profit organizations in the first quarter was 79.2 trillion won, up from 67 trillion won in the previous quarter.
Net fund management refers to the increase in surplus funds available to economic entities. For households, it is calculated by subtracting borrowed funds from the total amount managed, which includes deposits, insurance, pensions, funds, and stocks.
The increase in household net fund management compared to the previous quarter is attributed to rising household income from year-end bonuses and an increase in surplus funds due to a decrease in new apartment supply.
Fund management expanded primarily in equity securities and investment funds, with the total amount reaching 61.4 trillion won, a significant increase from 34 trillion won in the previous quarter. Deposits in financial institutions also rose from 12.8 trillion won to 29.4 trillion won.
Household borrowing decreased slightly to 17.1 trillion won, down from 17.3 trillion won in the fourth quarter of last year.
Non-residents shifted from net acquisition to net disposal of domestic stocks, primarily selling off shares. This is interpreted as profit-taking following the rise in stock prices.
The net disposal of domestic issued stocks and investment fund shares by non-residents expanded significantly from -8.5 trillion won in the previous quarter to -62.1 trillion won.
Meanwhile, the scale of domestic residents' acquisition of foreign stocks decreased from 61.5 trillion won to 40.3 trillion won.
The financial asset to financial liability ratio for households and non-profit organizations rose to 2.60, up from 2.54 at the end of the previous quarter. Net financial assets increased by 183.5 trillion won to 3,950.2 trillion won compared to the end of the previous quarter.
The net fund management amount for non-financial corporations reached 20.8 trillion won, a significant increase from 1 billion won in the previous quarter, marking the highest level since the statistics began in 2009.
Kim Yong-hyun, head of the Bank of Korea's Fund Circulation Team, analyzed that non-financial corporations, as the main agents of production, typically face a shortage of funds for physical investments compared to financial investments. However, this quarter, a surge in operating profits due to a strong semiconductor market led to a significant increase in surplus funds for non-financial corporations.
The household debt-to-GDP ratio fell by 2.9 percentage points to 85.3% compared to the end of the previous quarter. Kim noted that household debt increased by about 0.6% this quarter due to government regulations on household loans and stricter management by banks. He explained that the nominal GDP growth rate for the first quarter was about 4% compared to the previous quarter, contributing to the significant drop in the household debt ratio.
He added, "The government has announced plans to manage the household debt ratio below 80%. If household debt is significantly controlled and nominal GDP rises by over 10% this year, the household debt ratio could decrease considerably."
The net fund procurement amount from the external sector reached 84.3 trillion won, influenced by an increase in the current account surplus. This is the highest level since the statistics began in 2009, surpassing the previous record of 53.3 trillion won in the third quarter of last year.
Kim stated, "The net procurement amount from the external sector was also influenced by the increase in international balance due to rising exports, significantly driven by semiconductor exports."
* This article has been translated by AI.
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