Korean individual investors withdrew approximately 20 trillion KRW from stock market deposit accounts over a one-month period as the KOSPI index fell from above 9000 points to the 7200 range. Daily average net buying by individuals in the securities market declined 42.4% from 2.5956 trillion KRW last month to 1.494 trillion KRW this month, according to Korea Exchange and Nexttrade data. The capital outflow and reduced trading activity reversed the large-scale inflows seen earlier in the year, driven by extreme market volatility and investor fatigue.
Korean Stocks Investor Deposits and Credit Balances Decline
Investor deposit accounts stood at 107.1279 trillion KRW as of the previous day, down approximately 20 trillion KRW from one month earlier. Credit balance decreased from 38.6328 trillion KRW on the 24th of last month to 36.6336 trillion KRW as of the 9th. Investor deposits had already declined by about 11 trillion KRW in June, with an additional 13 trillion KRW reduction continuing into this month.
Individual net buying volume in the securities market dropped 80.7%, from 54.5084 trillion KRW in June to 10.5384 trillion KRW this month. The decline in new capital inflows to the market reflects weakened investor sentiment despite similar deposit account reduction magnitudes.
High-Net-Worth Investors Adjust Strategies Amid Volatility
High-net-worth investors who had actively increased equity allocations are rapidly revising investment strategies. Interviews with private bankers (PBs) from Mirae Asset Securities, NH Investment & Securities, KB Securities, Hana Securities, and Meritz Securities revealed that field experts perceive a clear shift in individual capital flows.
Kim Tae-yeon, a PB at KB Securities Gold & Wise The First Apgujeong Center, stated: "Compared to May, new capital inflows slowed sharply from mid-June onward. Previously, consultations continued all day, but recently new investment consultations themselves have dropped significantly." Kim added: "Especially customers who first entered the stock market in May–June express considerable anxiety after experiencing large volatility before making profits. The most common questions are whether the semiconductor cycle has ended and whether they should liquidate holdings now."
Asset managers who increased equity allocations relatively early are waiting for an index rebound, but multiple field experts reported that new capital inflows have effectively stopped due to recent sharp market swings. A KB Securities official said: "Customers with valuation gains are mostly holding stocks and waiting for a rebound, but there is virtually no new capital inflow."
Lee Hyun-jin, a director at NH Investment & Securities Premier Blue Samsung-dong Center, stated: "High-net-worth investors who recently increased equity allocations are experiencing considerable fatigue from volatility. However, nine out of ten hold the view that Samsung Electronics and SK Hynix will eventually rise again, so the atmosphere favors holding over selling." Lee added: "Cases of inquiries about investment options that can reduce volatility, such as long-short funds, ELS, and pre-IPO, are increasing."
Direct Stock Holdings Preferred Over Leveraged Products
Differences in volatility response methods emerged between general investors and high-net-worth individuals. PBs unanimously reported that high-net-worth investors prefer long-term investment centered on direct stock holdings rather than credit trading or single-stock leveraged ETFs.
Kim Tae-yeon stated: "General investors have a high proportion of credit transactions and leveraged ETFs, making them more sensitive to volatility, but high-net-worth investors rarely use credit." Meritz Securities explained: "Due to strong long-term investment tendencies, most cases involve steadily accumulating direct holdings rather than single-stock leveraged ETFs."
Private Bankers Forecast Continued Wait-and-See Approach
Market outlook among PBs remains cautiously optimistic. Lee Hee-kwon, branch manager of Meritz Securities Gwanghwamun Premier Center, said: "The most common question recently is whether to reduce equity holdings now. However, there are not yet clear signals that the market has fully transitioned to a bear market."
Lee continued: "Samsung Electronics and SK Hynix are still viewed as long-term investment targets, and there is a possibility of rotation into oversold stocks once volatility subsides."
PBs forecast that a wait-and-see stance will continue until US big tech AI investment trends and semiconductor industry conditions are confirmed. However, they agreed that many investors are still waiting for investment opportunities rather than leaving the market.
Oh Jeong-taek, a director at Mirae Asset Securities Investment Center Banpo WM, stated: "The most common customer question recently is 'Where should we look after semiconductors?' Rather than repeating trades swayed by short-term volatility, it is important to maintain a portfolio from a long-term perspective, looking at sectors where the AI investment cycle can continue and overseas quality assets together."
FAQ
Q: What caused Korean stocks investor deposits to decline in recent weeks?
A: Investor deposit accounts declined approximately 20 trillion KRW over a one-month period as the KOSPI index fell from above 9000 points to the 7200 range, according to Korea Exchange and Nexttrade data. The extreme market volatility and investor fatigue reversed large-scale inflows seen earlier in the year.
Q: How are high-net-worth investors responding to Korean stock market volatility?
A: High-net-worth investors are pausing new capital inflows while holding existing positions, according to private bankers from major securities firms. Nine out of ten investors interviewed by NH Investment & Securities believe Samsung Electronics and SK Hynix will eventually recover, favoring holding over selling. Inquiries about volatility-reducing investments such as long-short funds and ELS are increasing.
