Korean stock market trading volume and investor deposits declined as individual investors reduced positions amid unfavorable external conditions. On July 20, KOSPI market trading volume recorded 33.2087 trillion won, down 35.9% from 51.8114 trillion won on July 1, according to Korea Exchange data. The decline stems from AI profitability concerns and Middle East war uncertainty triggering risk-averse sentiment, with loss-cutting sales emerging as investor psychology weakened, according to Lee Kyung-min, FICC Research Director at Daishin Securities. Market analysts expect continued volatility as domestic supply-demand conditions deteriorated alongside unfavorable external environments including semiconductor sector weakness.
KOSPI Trading Volume Drops 35.9% from July 1 to July 20
KOSPI market trading volume on July 20 reached 33.2087 trillion won, representing a 35.9% decrease from July 1's 51.8114 trillion won, according to Korea Exchange. Trading volume exceeded 92 trillion won in May but shrank to the 30 trillion won range recently. The decline reflects reduced supply-demand fundamentals rather than price movements alone, as trading volume reached 51.012 trillion won on April 27 when the KOSPI index stood at similar levels (closing at 6615.03).
Investor Deposits Fall to 108 Trillion Won by July 16
Investor deposits, representing standby purchasing funds, decreased to 108.0819 trillion won as of July 16, according to the Korea Financial Investment Association. Deposits approached 140 trillion won last month before declining to 120.0837 trillion won on July 1, continuing the downward trend thereafter.
Individual Investors Reduce Net Buying and Credit Trading
Individual investors' net buying weakened recently after supporting the market. From July 13 to July 20, individual investors' net buying totaled 1.293 trillion won, down from 3.6748 trillion won in the previous week (July 6-10). Credit trading balance on July 16 stood at 33.3624 trillion won, declining 10.65% from 37.3393 trillion won on July 1.
Lee Kyung-min stated that semiconductor stock declines in US markets and escalating US-Iran military tensions strengthened risk-averse sentiment, with loss-cutting sales emerging as individual investor psychology weakened.
Analysts Emphasize Foreign Investor Return as Key Factor
Financial investment industry experts view foreign investor return as critical given the expanded supply-demand gap, as individual investors previously absorbed foreign selling while driving KOSPI index gains. Kim Sung-no, researcher at BNK Investment Securities, stated that variables determining foreign investor trading direction are Samsung Electronics and SK Hynix, noting foreign ownership rates reached average levels for SK Hynix and historically low levels for Samsung Electronics. As of July 16, foreign ownership rates stood at 46.6% for Samsung Electronics and 52.44% for SK Hynix.
Kim Dae-jun, researcher at Korea Investment Securities, stated that with external environments unfavorable to the market and internal supply-demand weaker than before, the probability of positive supply-demand trend changes remains low in the near term, necessitating defensive responses. Lee Sang-yeon, researcher at Shinyoung Securities, stated that investor deposits function more as a coincident indicator than a leading indicator, noting that demand deposits as another standby fund maintain growth trends with sufficient potential funds for market inflow when risk appetite strengthens.
Kim Dae-jun advised focusing on second-quarter earnings improvement, stating that strategy diversification toward sectors capable of profit defense is necessary in the near term.
FAQ
Q: What caused Korean stock market trading volume to decline on July 20?
A: KOSPI market trading volume on July 20 recorded 33.2087 trillion won, down 35.9% from July 1's 51.8114 trillion won, according to Korea Exchange data. The decline resulted from AI profitability concerns, Middle East war uncertainty, and semiconductor sector weakness triggering risk-averse sentiment and loss-cutting sales as individual investor psychology weakened.
Q: How much did investor deposits decrease by July 16?
A: Investor deposits fell to 108.0819 trillion won as of July 16, according to the Korea Financial Investment Association. Deposits approached 140 trillion won last month before declining to 120.0837 trillion won on July 1, continuing the downward trend thereafter.
Q: What are foreign ownership rates for Samsung Electronics and SK Hynix?
A: As of July 16, foreign ownership rates stood at 46.6% for Samsung Electronics and 52.44% for SK Hynix, according to Kim Sung-no, researcher at BNK Investment Securities, who noted these rates reached historically low levels for Samsung Electronics and average levels for SK Hynix.
