Record-Breaking Trading Volume in Korean Stock Market: How Long Will It Last?

Average Daily Trading Value of 24.9 Trillion KRW This Month...168% Increase Compared to Last Year
Investor Deposits Also Reach Record High of 48 Trillion KRW
"Unlikely to Sustain for Over a Year...Even if Decreases Occur, Levels Will Remain Higher Than Usual"

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The scale of trading volume in the domestic stock market is experiencing an unprecedented surge. Although it may be difficult for this upward trend to continue for more than a year, there is a forecast that once the trading volume level rises, it will rarely decrease.

According to the Korea Exchange on the 21st, the average daily trading volume of the KOSPI and KOSDAQ markets as of the 19th of this month is 24.9163 trillion KRW. This is a 168% increase compared to last year's average of 9.299 trillion KRW. The average for this year is also nearly double the previous year at 18.1169 trillion KRW. The increase has been particularly noticeable this year. It was 11.881 trillion KRW in January, but steadily rose to 14.175 trillion KRW in February and 18.492 trillion KRW in March. In April, it surpassed 20 trillion KRW, recording 20.78 trillion KRW. Although it slightly slowed in May with 20.2235 trillion KRW, by mid-month it was already approaching 25 trillion KRW. As the COVID-19 pandemic caused economic recession and increased stock market volatility, the market index fell, leading to a surge in individual investors participating in the so-called 'Donghak Ant Movement,' which further increased trading volume.

Hyundai Motor Securities diagnosed that this high level of trading volume is unlikely to be maintained for more than a year. Researcher Hyunki Kim of Hyundai Motor Securities explained, "Looking at the past 10 years since 2010, there have been three periods of increased trading volume," adding, "Although the durations varied, none lasted more than a year." Indeed, in 2010, 2015, and 2018, the average daily trading volume exceeded the annual average for certain periods, but it did not continue throughout the entire year and eventually declined. However, after an increase in trading volume, a higher level of trading volume was established. This is why there is a forecast that even if trading volume decreases in the future, the overall trading volume will remain higher than last year."

Investor deposits, which are standby funds for the stock market, have also reached an all-time high. According to the Korea Financial Investment Association, investor deposits reached a record high of 48.2068 trillion KRW on the 16th. The amount has consistently remained in the 46 trillion KRW range this month. Based on past cases of short-term declines followed by rebounds during global financial crises, this is presumed to be an inflow of funds aiming for bargain purchases. Researcher Kim analyzed, "Deposits tend to maintain their high levels once increased rather than decrease again, and a sharp decline is unlikely," adding, "The broad money supply growth rate, which includes cash, demand deposits, time deposits and savings deposits with maturities under two years, and money market funds (MMFs), is also continuously rising, contributing to the inflow of funds into the capital market."

This content was produced with the assistance of AI translation services.