The Kakao Bank Effect... 'Big Money' Returns to the Stock Market

[Asia Economy Reporter Hwang Junho] Due to the KakaoBank subscription frenzy, waiting funds in the stock market, such as investor deposits and credit loan balances, have surged to record highs. There is interest in whether this can bring new vitality to the stock market trapped in a box range.

According to the Korea Financial Investment Association on the 28th, as of the 26th, deposits totaled 71.6646 trillion won. It is in the 70 trillion won range for the first time in 52 trading days. The balance of Comprehensive Asset Management Accounts (CMA) is also at an all-time high. On the 7th, it recorded 71.0579 trillion won, marking a record high. Recently, after reaching 70 trillion won on the 23rd, it has slightly declined to around 66 trillion won as of the 26th.

The credit loan balance also hit a record high of 24.7713 trillion won on the 19th. As of the 26th, it slightly decreased to 24.5846 trillion won. Along with the controversy over 'debt investment,' if securities firms, whose lending capacity (credit limits) had been exhausted, had not stopped providing credit loans, the balance would likely have continued to increase.

The primary reason for the influx of funds into the stock market is attributed to the capital inflow from KakaoBank's initial public offering (IPO). The KakaoBank subscription, which ended on the 27th, attracted 58.302 trillion won. Although this amount did not reach that of SK IE Technology (80.9 trillion won) or SK Bioscience (63.6 trillion won), considering BNK Investment & Securities' overvaluation controversy and the prohibition of duplicate subscriptions, KakaoBank's name value is significant.

Following the KakaoBank effect, waiting funds in the stock market are expected to grow further. This is because the refund deposits from unsuccessful subscriptions are tied up as waiting funds. KakaoBank's refund deposits are estimated by considering the general subscription volume of 16,362,500 shares plus 340,000 shares released from the forfeiture of employee stock ownership association shares, totaling about 16.7 million shares. Applying the public offering price of 39,000 won per share, the general public offering amount is estimated at approximately 651.3 billion won. This means about 57 trillion won could be returned to the stock market as waiting funds.

However, it is uncertain whether the temporarily accumulated waiting funds will lead to a rise in the stock market. The IPO refund deposits of SK IE Technology conducted at the end of April were released on May 3rd. At that time, deposits decreased from 73 trillion won to 59 trillion won due to the subscription but increased to 77 trillion won following the refund of deposits. The KOSPI was trapped in a box range around the 3100 level, but after the refund on the 3rd, it rose from 3147.37 to 3249.30 on the 7th. However, a sustained upward trend was not observed, and deposits fell back to the 60 trillion won range.

Experts emphasize that the increased waiting funds are likely to be favorable for the stock market. Hwang Sewoon, a research fellow at the Korea Capital Market Institute, said, "The increase in deposits and credit loan balances indicates that investors' perspectives on the stock market are very positive," adding, "An increase in liquidity in the stock market can be evaluated as a very favorable market environment for stock market growth."

Kim Suyeon, a researcher at Hanwha Investment & Securities, explained, "IPO booms often occur at market peaks," adding, "In this year’s case, large-scale IPOs were concentrated in the second half, which was considered a negative factor for the stock market. However, the authorities reduced and dispersed the public offering sizes of large IPOs, which is analyzed to have lessened the burden on the market."

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