South Korea Overdraft Loans Hit 3-Year High Amid Stock Rally

The balance of personal overdraft loans, so-called "minus accounts," at South Korea's five major banks -- KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup -- stood at 40.5 trillion won (US$27.64 billion) as of Thursday.

Based on month-end figures, it marks the largest balance since January 2023, when the total reached 40.54 trillion won, reports Yonhap news agency.

In the three business days since the end of April, the figure increased by 715.2 billion won.

In contrast, demand deposits, regarded as standby funds, have continued to decline, suggesting a possible shift of funds from bank accounts into stock investments.

As of Thursday, combined demand deposit balances at the five lenders totaled 696.06 trillion won, down 501.3 billion won from the end of last month. In April alone, the balance fell by 3.36 trillion won.

"As the stock market rallies, a growing number of investors appear to be using short-term liquidity for stock investments," a bank official said. "Due to tighter government regulations on household loans, there also appears to be demand for credit loans to supplement housing-related funding needs."

South Korea's stock market, as measured by the benchmark Korea Composite Stock Price Index (KOSPI), has been among the world's best-performing markets this year, with the index surging more than 70 percent, driven largely by strong gains in semiconductor stocks. On Friday, the index reached a fresh record high of 7,498.

Meanwhile, the number of large orders worth over 100 million won placed by retail investors on the KOSPI totaled 1,193,158 in April, marking the highest monthly figure ever, according to the data from the bourse operator, the Korea Exchange.

- IANS