Household Financial Assets' Stock Proportion Surpasses 20% for the First Time... Record High Stock Investment in Q1

Bank of Korea 'Q1 Financial Flow (Provisional)'

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] In the first quarter (January to March), household stock investments reached an all-time high, pushing the proportion of stocks in household financial assets above 20% for the first time.

According to the "First Quarter Fund Circulation (Provisional)" released by the Bank of Korea on the 8th, the net fund operation amount of households (including sole proprietors) and non-profit organizations in the first quarter of this year was 44 trillion won, slightly down from 65.9 trillion won in the first quarter of last year. The net fund operation amount is the value obtained by subtracting fund procurement from fund operation by economic agents. Typically, households play a role in supplying surplus funds to other economic agents such as companies or the government by placing their surplus funds in deposits or investments while maintaining a positive net fund operation amount.

Household fund operations in the first quarter increased to 96.1 trillion won from 81.1 trillion won in the first quarter of last year, but during the same period, fund procurement rose more sharply from 15.2 trillion won to 52.1 trillion won, resulting in a decrease in net fund operation.

Looking at where households operated their funds, resident-issued stocks (domestic stocks) acquired in the first quarter of this year amounted to 36.5 trillion won, and overseas stocks reached 12.5 trillion won, both the highest since statistics compilation began in 2009. This is a significant increase compared to the previous record in the third quarter of last year, with domestic stocks at 23.5 trillion won and overseas stocks at 8.3 trillion won. The amount invested solely in domestic stocks and funds totaled 39 trillion won, also the highest since 2009.

Regarding the proportion of household financial assets by type, the stock proportion exceeded 20% for the first time at 20.3%. Including funds, the proportion rose to 22.7%. Conversely, the deposit proportion decreased from 44.2% in the first quarter of last year to 41.0% in the first quarter of this year.

Additionally, in the first quarter of this year, with the easing of social distancing measures, household consumption expenditures expanded and housing investments increased, indicating that households used more discretionary funds.

Loans borrowed from financial institutions also surged from 15.2 trillion won in the first quarter of last year to 52.8 trillion won in the first quarter of this year, resulting in a reduced net operation margin. In the first quarter, households borrowed 38 trillion won from long-term deposit institutions, more than triple the 10.5 trillion won borrowed in the first quarter of last year.

Non-financial corporate enterprises (hereafter referred to as companies) saw net fund procurement in the first quarter decrease to 22.5 trillion won from 28.6 trillion won in the first quarter of last year. Due to improved corporate operating profits from strong exports in the first quarter of this year, companies reduced fund procurement such as short-term borrowing. While companies borrowed 18 trillion won in short-term loans in the first quarter of last year, they repaid 4 trillion won in the first quarter of this year.

The general government's net fund procurement sharply declined from 22.4 trillion won in the first quarter of last year to 4.3 trillion won in the first quarter of this year. The Bank of Korea analyzed that this was influenced by an increase in national tax revenue to 88.5 trillion won in the first quarter of this year, up from 69.5 trillion won in the first quarter of last year.

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