South Korea's Investment Rush: Why Bank Deposits Are Falling Amid Stock Boom

Combined demand deposits at five major lenders -- KB Kookmin, Shinhan, Hana, Woori and NH NongHyup -- stood at 649.53 trillion won ($451.3 billion) as of Thursday, down 20.19 trillion won from the end of September, according to data from the banks, reports Yonhap news agency.

This represents an average daily outflow of 877.9 billion won, with deposits projected to fall by about 27 trillion won by the end of the month, marking the steepest decline in 15 months since July 2024.

A significant portion of the demand deposits is believed to have flown into the real estate and stock markets amid the recent investment boom, according to officials.

Household loans are also on the rise, largely driven by credit loans centered around overdraft accounts as recent regulations have made it harder to secure home-backed loans.

The balance of credit lines at the five major banks stood at 104.52 trillion won, up 713.4 billion won from 103.81 trillion won at the end of September.

Notably, the balance of overdraft accounts rose sharply by 530.9 billion won from 38.79 trillion won at the end of last month, marking the largest increase since August 2024.

Meanwhile, South Korean stocks closed sharply higher Friday, hitting another record high on strong gains in tech shares, as investor sentiment was lifted by news of a planned summit between the leaders of the United States and China. The Korean won strengthened against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) increased 96.03 points, or 2.5 per cent, to close at 3,941.59.

Trade volume was moderate at 419 million shares worth 17.6 trillion won ($12.2 billion), with winners beating losers 474 to 407.

Institutions and foreign investors purchased 1.4 trillion won and 581.5 billion won worth of shares, respectively, while retail investors alone offloaded a net 2 trillion won.

- IANS