Record High Peripheral Funds in Stock Market... Overflowing Liquidity Awaits IPO Storm

Investor Deposits and Securities Firms' CMA Balances Reach Record Highs
Each Increases by Over 10 Trillion Won in a Single Day
Kakao Games Subscription Funds Flow Directly into the Stock Market... Awaiting October IPO

[Asia Economy Reporter Minwoo Lee] Investor deposits and securities firms' comprehensive asset management account (CMA) balances, considered peripheral funds in the stock market, have reached record highs. This is interpreted as the liquidity that flowed in during the record-breaking subscription competition at the Kakao Games initial public offering (IPO) remaining in the stock market. This large sum of money is expected to sustain the 'subscription fever' in the upcoming IPOs, including the listing of Big Hit Entertainment, the agency of world-class idol group BTS, scheduled for next month. Furthermore, it is anticipated to act as a driving force led by individual investors in the stock market.

According to the Korea Financial Investment Association on the 8th, as of the 4th, investor deposits totaled 63.2582 trillion won, marking the largest scale ever. This increased by about 15.8618 trillion won in just one day from 47.3964 trillion won the previous day. On the same day, the securities firms' CMA balance, which can be used to purchase financial products such as funds or equity-linked securities (ELS), also set a new record at 58.1313 trillion won, rising by 13 trillion won in one day. It is considered unusual for both investor deposits and securities firms' CMA balances to surge by more than 10 trillion won each in a single day.

This is interpreted as the funds that had been concentrated on Kakao Games, which sparked a record-breaking subscription frenzy, remaining around the stock market. The subscription deposits for Kakao Games amounted to 58.5543 trillion won, but the public offering amount was only 384 billion won. Of the 58.1703 trillion won refunded on the 4th, about half, approximately 29 trillion won, flowed into investor deposits and securities firms' CMA balances. In the case of Samsung Securities, the joint lead manager for Kakao Games' listing, only 12% of customers chose to have their refund transferred to their bank accounts after subscription, while the remaining 88% opted for CMA accounts.

It is interpreted that individual investors, seeing SK Biopharm continuously hitting the upper price limit after 'ttasang' (opening price formed at twice the public offering price followed by hitting the upper limit), are continuously monitoring and waiting for public offering subscriptions. P&K Skin Clinical Research Center (August 31 - September 1) and Eoflow (September 3-4), which held subscriptions around the same time as Kakao Games, also attracted popularity with competition rates of 1727.11 to 1 and 686.71 to 1, respectively. More public offering subscription schedules are lined up. OLED mask manufacturer PIMS and dental care company BBCC will accept subscription applications from general investors on the 9th and 10th, respectively. The public offering amounts are 38 billion won and 36.5 billion won, respectively. Following these, Wonbang Tech (maximum public offering amount of 69.7 billion won) on the 15th-16th, Quantametrics (maximum 85.3 billion won) on the 21st-22nd, and Panacia (maximum 162 billion won) on the 22nd-23rd will proceed with subscriptions consecutively.

The most notable 'giant' is Big Hit Entertainment. It will conduct demand forecasting for institutional investors on the 24th-25th and finalize the public offering price on the 28th. Subsequently, general investors will be able to subscribe on the 5th-6th of next month. A total of 7.13 million shares will be offered aiming for listing on the KOSPI market. The public offering amount is expected to reach up to 962.6 billion won, surpassing SK Biopharm (959.3 billion won) and Kakao Games (384 billion won). Given that the flagship idol BTS is popular worldwide, unprecedented interest is expected.

Lee Jaeman, a researcher at Hana Financial Investment, explained, "The movement of subscription refund money mainly follows three paths: bank deposits, short-term products like CMA, or remaining in securities accounts for re-subscription or stock market investment." He added, "Due to low deposit interest rates and strong real estate regulations, there are few alternative investment options in the market. Coupled with high expectations for upcoming IPOs like Big Hit, most investors are likely to keep their funds around the stock market for reinvestment, maintaining liquidity."

Additionally, the government’s announcement of the 'K-New Deal Index' has effectively identified stocks that could benefit from policy support, fueling individual investors' enthusiasm. Based on low interest rates and the ability of individuals to secure investment funds from banks at any time, it is expected that individual investors will continue to lead the stock market. SK Securities researcher Han Daehun explained, "Despite ongoing concerns about the second wave of COVID-19, foreign investors accelerated their withdrawal by net selling 1.6 trillion won worth in a single day on the 31st of last month." He added, "Nevertheless, the KOSPI rose due to liquidity centered on individual investors."

Kim Daejun, a researcher at Korea Investment & Securities, also noted, "Individual investors are no longer simply following foreign investors but are moving by understanding the overall market trends." He predicted, "Stocks that attract individual investors can see large capital inflows, and this influence of individuals will continue to lead the market throughout this year, supported by abundant liquidity."

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