November Stock Market Trading Volume Slightly Recovers... "Not a Trend Reversal Yet"

[Asia Economy Reporter Park Ji-hwan] Although the domestic stock market trading volume has recently shown a slight recovery, analysis suggests that it is not yet a full-fledged trend reversal.

On the 5th, SK Securities stated that while stock market trading has slightly recovered since November, it is not a trend reversal. They maintain a neutral outlook on the securities sector due to a lack of short-term momentum caused by decreased trading volume, despite a bright long-term outlook.

The decline in individual investors' KOSPI trading is evaluated to be linked to the sluggish overall stock market trading volume. SK Securities cited 'stock price adjustments' and 'the expansion of the cryptocurrency market' as reasons for individuals withdrawing from the stock market.

Researcher Koo Kyung-hoe of SK Securities said, "The average daily trading volume in the domestic stock market this month is 27.1 trillion KRW, a slight recovery compared to 25.3 trillion KRW last month," but added, "However, the turnover rate continues to decline trend-wise, so investor sentiment toward securities stocks remains poor."

The market capitalization turnover rate (annualized trading volume/market capitalization) rose to an average of 388% in the first quarter but remained at 250% in November. Researcher Koo stated, "Of course, since the recent decline in securities stocks has been excessive, there is a possibility of a temporary rebound, but I believe there is insufficient energy to sustain an upward trend."

The decline in stock market trading volume is mainly seen in the KOSPI. When comparing November's trading volume to the average from January to October, KOSDAQ actually increased by 6.3%, whereas KOSPI decreased by 28.8%. Since the second half of last year, the domestic stock market, which saw a sharp increase in trading volume, has been increasingly led by individual investors. As of November, individual trading volume on the KOSPI was 13.5 trillion KRW, down 36% compared to the January-October average.

Researcher Koo said, "As the cryptocurrency market grows, it is becoming a substitute for the stock market," adding, "According to CoinMarketCap API data, the average daily trading volume of the top five domestic coin exchanges in November was 5.4 trillion KRW. This is about 46% of the KOSPI's 11.7 trillion KRW in November."