Are Retail Investors Running Out of 'Ammo'? Brokerage Deposits Dip Below 110 Trillion Won

As the South Korean stock market experiences recent volatility, investor deposits, which serve as standby funds for the market, have fallen below 110 trillion won for the first time in five months.
According to the Korea Financial Investment Association, investor deposits were recorded at approximately 107.1 trillion won as of July 9.
This is the lowest level since February 20, when the figure stood at approximately 104.1 trillion won.
Investor deposits have declined for eight consecutive trading days since reaching 132.47 trillion won on June 29.
Investor deposits are a type of standby capital—funds that have been deposited into brokerage accounts to purchase stocks but remain in cash.
The decline is interpreted as a result of individual investors either engaging in bargain hunting or withdrawing their funds entirely after the KOSPI index hit a record closing high of 9,114.55 on June 22, followed by several sharp drops that saw the index briefly slide to 7,063.76 during intraday trading.
While a decrease in investor deposits does not necessarily mean an exodus from the stock market, a reduction in standby capital can be interpreted as a sign that the "ammunition" needed to absorb selling pressure from foreign investors and others is running low.
During the first 10 days of this month, foreign investors net sold approximately 12.3 trillion won worth of stocks on the KOSPI market, but individual investors defended the index's floor by net buying nearly 9.4 trillion won.
However, individual investors turned to net selling on July 8 and have remained net sellers for three consecutive trading days through July 10.
Foreign investors, who had maintained a continuous net selling trend since June 19, briefly turned to net buying on July 8 and 9, but returned to a net selling position of 322.6 billion won on July 10.
Kim Yong-gu, a researcher at Yuanta Securities, analyzed, "Although individual investors are supporting the market, I believe the capacity for individual net buying cannot expand indefinitely when considering factors such as the Bank of Korea's interest rate hikes, the government's loan regulations, and the decrease in investor deposits."
The balance of securities lending, which bets on falling stock prices, reached 161.9 trillion won on July 9, a slight increase from the previous trading day.
This figure had decreased for two consecutive trading days after reaching 175.4 trillion won on July 6, before rebounding.
The balance of credit loans for stock investment, an indicator of so-called "debt-financed investment," also fell to 36.6 trillion won on July 9, the lowest level since May 26, when it stood at 36.25 trillion won.
The balance of credit loans represents the amount that investors have borrowed from brokerage firms for stock investments and have not yet repaid.
This indicates that individual investors have a significant amount of debt-financed investments.
In contrast to the cautious stance individual investors are taking in the domestic stock market compared to past bull markets, they have shown an aggressive investment tendency in overseas markets.
According to SEIBro, the securities information portal of the Korea Securities Depository, the overseas ETF with the highest net purchase settlement amount over the past week was the so-called "SOXL" (Direxion Daily Semiconductors Bull 3X Shares).
SOXL tracks the Philadelphia Semiconductor Index at three times the daily performance.
It was followed by "KORU" (Direxion Shares ETF Trust Daily MSCI South Korea Bull), which tracks the performance of the South Korean stock market at three times the daily rate.
The combined net purchase settlement amount for these two products exceeds 2.5 trillion won in Korean currency.
※ Please note: This article was translated by AI and may contain errors.