Investor deposits — cash held in brokerage accounts for future stock purchases — fell to 112.21 trillion won ($76.7 billion) as of Monday, according to the Korea Financial Investment Association, down more than 6 trillion won from 118.26 trillion won on July 3 and the lowest level in nearly three months.
The decline came despite a sharp return in retail buying.
Individual investors purchased a combined net 3.47 trillion won worth of domestic equities and exchange-traded funds (ETFs) on July 6, including 2.68 trillion won on the KOSPI and 259.1 billion won on the KOSDAQ.
Yet investor deposits continued to shrink, suggesting the buying was financed largely with existing market liquidity rather than fresh cash entering brokerage accounts.
The outflow has been swift. Investor deposits have dropped more than 20 trillion won from 139.69 trillion won on June 4 and another 20 trillion won in just five trading sessions from 132.47 trillion won on June 29.
The figures point to a widening disconnect between trading activity and market liquidity. Retail investors have resumed aggressive buying, but without a corresponding increase in cash parked at brokerages, indicating that existing funds are simply changing hands rather than new money entering the market.
Earlier trading data pointed in the same direction. On July 3, individuals sold a net 2.56 trillion won worth of KOSPI shares and another 101.4 billion won of ETFs while buying a net 148.1 billion won on the KOSDAQ.
Only part of that money moved overseas. According to Korea Securities Depository data, Korean investors bought $1.94 billion and sold $1.17 billion worth of foreign stocks on July 3, for net purchases of $773.72 million, or roughly 1.12 trillion won. U.S. stocks accounted for virtually all of the inflow, with net purchases totaling $777.77 million.
That means less than half of the proceeds from KOSPI sales appears to have been redirected into overseas equities. Even after accounting for those purchases, more than 1 trillion won would ordinarily have remained in brokerage accounts. Instead, investor deposits continued to decline, suggesting some funds were leaving brokerage accounts altogether rather than being recycled within equity markets.
The pattern indicates retail investors may be reducing overall risk exposure, with part of the cash likely moving into bank deposits, money-market funds or other lower-volatility assets.
Signs of stress among leveraged investors also persisted.
Outstanding unpaid stock settlement balances rose to 1.44 trillion won as of July 6 from 1.13 trillion won three trading days earlier, indicating that unsettled trading obligations continued to accumulate.
Forced liquidations eased to 39.7 billion won from 56.4 billion won, while the ratio of forced selling to outstanding unsettled balances declined to 3.5 percent from 5.3 percent. Although immediate liquidation pressure moderated, the increase in unpaid balances suggests leveraged investors remain under strain.
The market remained highly volatile Tuesday, with the benchmark KOSPI tumbling 4.91 percent to 7,656.31 and the KOSDAQ falling 1.87 percent to 831.23.
Taken together, the latest data suggest the recent market rebound has relied more on recycled liquidity than fresh retail inflows. Until investor deposits begin rising alongside retail buying, the market's ability to absorb sustained foreign selling is likely to remain limited.
Copyright ⓒ Aju Press All rights reserved.
