21.6% of Household Financial Assets in Q2 Are Stocks... 'Record High'

Bank of Korea Releases 'Q2 Financial Flow (Preliminary)' Data

[Asia Economy Reporter Jang Sehee] The proportion of stocks in household financial assets has once again reached a record high. However, considering the increase in household borrowings from financial institutions, it is estimated to be driven by leveraged investment.

According to the 'Q2 Financial Flow (Provisional)' statistics released by the Bank of Korea on the 8th, the net fund operation amount of households (including self-employed individuals) and non-profit organizations was recorded at 24.5 trillion won. This is a sharp decrease of 38 trillion won compared to Q2 last year (62.8 trillion won).

The net fund operation amount is the value obtained by subtracting fund procurement from fund operation for the economic entity. Usually, households supply surplus funds to other economic entities such as companies or the government through deposits or investments when this net fund operation amount is positive (+).

Regarding the decrease in households' net fund operation amount, the Bank of Korea analyzed that it was due to the revival of private consumption and an increase in housing investment.

The total fund operation scale of households in Q2 (80.5 trillion won), without considering procurement, decreased by nearly 30 trillion won compared to Q2 last year (109.2 trillion won).

Breaking down fund operation by sector, households' domestic equity securities and investment funds (30.1 trillion won) decreased compared to Q1 (39 trillion won) but increased by 9.2 trillion won compared to Q2 last year (20.9 trillion won).

Excluding investment funds, households operated 32 trillion won in domestic and foreign stocks in Q2. They acquired 29.2 trillion won worth of resident-issued stocks and equity shares (domestic stocks) and 2.8 trillion won worth of foreign stocks. The acquisition amount of domestic stocks was the second highest ever following Q1 (36.5 trillion won), but foreign stocks sharply declined from 12.5 trillion won in Q1.

Bang Jungkwon, head of the Financial Flow Team at the Bank of Korea's Economic Statistics Bureau, explained, "The KOSPI rose 7.7% at the end of Q2 compared to the end of Q1," adding, "However, indices like the US Dow Jones did not rise as much as the domestic stock market."

The proportion of stocks and investment funds within household financial assets surpassed 20% for the first time in Q1 (20.3%) and set a new record again in Q2 (21.6%).

Households procured a total of 56 trillion won in Q2, with borrowings from financial institutions (54.9 trillion won) increasing by nearly 10 trillion won compared to Q1 last year (45 trillion won).

For non-financial corporate enterprises, the net procurement scale in Q2 was 22 trillion won, down from 29.6 trillion won a year earlier. This was because the scale of fund procurement, centered on short-term borrowings from financial institutions, decreased more sharply than fund operation.

Meanwhile, the general government shifted from a net procurement state of 37.1 trillion won in Q2 last year to a net operation state of 4.5 trillion won in Q1 this year.

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