Korean Stock Market Crash Leads to Capital Flight to Banks, Over 240 Trillion KRW Deposited into Time Deposits

August 1st. According to the Korean media Daum, the recent volatility in the South Korean stock market has intensified, with investors showing a significant decrease in risk appetite. Funds are flowing back from the stock market to safe-haven assets such as banks. Due to adjustments in the semiconductor sector and stricter regulation on leveraged investments, the idle investment funds in the Korean stock market have rapidly withdrawn, leading to a phenomenon of "reverse fund migration" in the market.

Data shows that as of the end of July, the time deposit balance of the five major banks in Korea (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) reached 973.49 trillion Korean won, an increase of 24.09 trillion Korean won from the end of the previous month, marking the largest monthly increase so far this year.

Funds around the stock market have also seen a significant contraction. Data from the Korea Financial Investment Association shows that investor securities account deposits (funds waiting for stock trading) reached a historical high of 139.69 trillion Korean won on June 4th, but as of July 28th, it had dropped to 107.20 trillion Korean won, a decrease of over 32 trillion Korean won in less than two months. The credit trading financing balance, which represents the scale of market financing transactions, also decreased to 33.19 trillion Korean won at the same time, down from the peak of 37.72 trillion Korean won set on July 2nd, a reduction of approximately 4.5 trillion Korean won, or about 12%.