The domestic stock market's downturn has led to a significant drop in investor deposits, a key indicator of individual investors' purchasing power, reaching its lowest level in 10 months. Concerns are growing that the continued selling by foreign investors may further weaken the buying capacity of individual investors.
According to the Korea Financial Investment Association, as of November 3, investor deposits totaled 88.2413 trillion won, marking the lowest level since January 13. Investor deposits consist of funds that investors have set aside in brokerage accounts for stock purchases, as well as funds withdrawn after selling stocks, serving as a major indicator of market liquidity and individual investment capacity.
In particular, the recent month has seen a sharp decline in investor deposits, dropping from 104.6644 trillion won at the end of September to 90.2351 trillion won at the end of October, a decrease of 14.4293 trillion won (13.8%). During the same period, the KOSPI index fell from 6,870.81 to 5,730.74, a drop of 1,140.07 points (16.59%).
This decline is attributed to individual investors utilizing a significant portion of their waiting funds for stock purchases during the market downturn. In fact, since reaching a peak in early June, individual investors have net purchased tens of trillions of won worth of stocks in both the KOSDAQ and KOSPI markets.
Additionally, individual investors' leveraged investments are rapidly contracting. As of November 3, the balance of margin trading loans fell to 28.9502 trillion won, the lowest level in about three months since August 7. This represents a decrease of 4.6781 trillion won (13.9%) compared to 33.6282 trillion won a month earlier.
The increasing uncertainty surrounding the domestic stock market may also restrict the inflow of waiting funds. Following the U.S. midterm elections, policy uncertainties have heightened, and concerns persist regarding the semiconductor sector, which is favored by individual investors. In particular, potential regulations related to artificial intelligence (AI) data centers could weigh on investor sentiment towards semiconductor stocks.
If the buying momentum from individual investors continues to weaken, the supply-demand pressure on the domestic stock market could intensify. From November 1 to November 4, foreign investors net sold 23 trillion won worth of stocks, while individual investors net purchased 5 trillion won. Although this was insufficient to reverse the market decline, it has been seen as a buffer against foreign selling. If the decrease in deposits continues and individual investors' buying capacity diminishes, concerns are growing that downward pressure on the stock market could increase.
* This article has been translated by AI.
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