KOSPI Falls 6.9% in Q3... Cooling Enthusiasm for Individual Direct Investment

KOSPI Posts First Quarterly Decline Since Q1 Last Year
Individual Investor Trading Volume Decreases for Second Consecutive Quarter Amid Market Slump

On the 1st, dealers are working in the dealing room of Hana Bank in Euljiro, Seoul, as the KOSPI index started lower due to the sluggish U.S. stock market. The won-dollar exchange rate opened at 1,185.0 won, up 1.0 won from the previous session, showing a stable trend. Photo by Moon Honam munonam@

[Asia Economy Reporter Minji Lee] The trading volume of individual investors in the stock market has been declining for two consecutive quarters. This is analyzed as a cooling of individual direct investment enthusiasm as the index has fallen.

According to the financial investment industry on the 3rd, the average daily trading volume (average of purchase and sale amounts) of individuals in the KOSPI and KOSDAQ markets in the third quarter was 19.3 trillion won. This is the smallest scale since the second quarter of last year (16.8 trillion won) on a quarterly basis.

The average daily trading volume decreased for two consecutive quarters from 24.5 trillion won in the first quarter of this year to 20.2 trillion won in the second quarter and 19.3 trillion won in the third quarter. By month, the average daily trading volume of individuals last month was 17.7 trillion won, the lowest since October last year (16.1 trillion won).

The balance of credit transactions, an indicator showing individuals' "debt investment" phenomenon, recorded 24.8 trillion won on the 30th of last month, showing a decline for 10 consecutive trading days. Customer deposits, which serve as standby funds for the stock market, have not increased since reaching a record high of 77.9 trillion won in May.

It is interpreted that individual investors' trading volume has significantly decreased as the stock market showed prolonged sluggishness amid concerns that the US interest rate hike could accelerate faster than expected due to prolonged inflation. The KOSPI rose by 6.54% and 7.68% in the first and second quarters of this year, respectively, but fell by 6.91% in the third quarter. This is the first quarterly decline since the first quarter of last year, which was impacted by COVID-19. During this period, individuals net purchased 16.1357 trillion won, but foreigners and institutions net sold 10.2672 trillion won and 5.0716 trillion won, respectively. The KOSDAQ index fell by 2.6% during the same period.

On the other hand, public offering funds, which are indirect investment vehicles, have seen notable capital inflows. Although funds had low interest due to individuals' preference for direct investment, capital inflows have expanded as stock market volatility increased. Domestic equity active funds have seen a net inflow of 434.3 billion won over the past three months. The net inflow of domestic equity public offering funds, including exchange-traded funds (ETFs), was 2.5 billion won in September, with 260.2 billion won in July and 1.627 trillion won in August, respectively.

Lee Euntak, a researcher at KB Securities, said, “A prolonged adjustment has been taking place since July, and among various uncertainties, the most serious is inflation. This issue will be a turning point around mid-October,” adding, “Considering that valuation has been considerably adjusted through a nine-month period of adjustment, a strong rebound is expected after the current tightening adjustment.”

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