Frightened 'Stock Market Funds'... Are They Flocking to CMA? "Reaching 70 Trillion Again"

[Asia Economy Reporter Lee Seon-ae] As investment sentiment sharply contracts amid market volatility, stock market trading volume has plummeted, and this directionless capital is flowing into CMA (Comprehensive Asset Management Accounts). With securities firms competing to raise CMA interest rates, demand to use them as 'parking accounts' is increasing, and CMA balances are expected to surpass 70 trillion won again.

According to the Korea Financial Investment Association on the 18th, CMA balances were recorded at 69.0342 trillion won as of the 9th, raising expectations of breaking through 70 trillion won. The CMA balance first exceeded 70 trillion won on July 23 last year (70.3628 trillion won). This year, on February 4, it rose again to 70.1732 trillion won after about seven months, marking the fourth-highest balance since related statistics began. Compared to the same period last year, when the CMA balance was 65.1249 trillion won, this represents a 7.8% (5.0483 trillion won) increase over one year. On February 8, it again surpassed 70 trillion won, reaching 70.1303 trillion won, but then fell below 70 trillion won continuously. Recently, however, it surged above 69 trillion won, attracting capital. On the 10th and 11th, it maintained 68.6321 trillion won and 68.527 trillion won, respectively, and on the 16th, it slightly decreased to 64.9479 trillion won.

CMA is a financial product where securities firms manage funds received from customers and pay out the generated profits. It allows for frequent deposits and withdrawals and invests in short-term or stable products such as Money Market Funds (MMF), Repurchase Agreements (RP), and Issued Commercial Papers, quickly reflecting returns.

Recently, securities firms have consecutively raised CMA interest rates, increasing their attractiveness. Mirae Asset Securities, Korea Investment & Securities, Samsung Securities, and others have raised their rates.

In the past, CMA was very popular but somewhat lost attention due to the low-interest-rate environment. At the end of 2016, CMA accounts numbered 12.07 million with a balance of 53.722 trillion won. As the low-interest-rate trend continued, by the end of 2019, accounts reached 15.72 million, but balances dropped to 43.0065 trillion won. However, with recent interest rate hikes, new customers and capital inflows are occurring again. As of the 16th, the number of accounts reached 34.8 million, an increase of about 3 million compared to the beginning of the year.

An industry insider said, "The reason securities firms are rushing to raise CMA interest rates is to prevent funds that had flowed into stocks from moving to bank deposits due to the sluggish stock market," adding, "As CMA interest rates rise, demand to use them as parking accounts is increasing, and investment funds are expected to continue flowing in."

In fact, stock trading volume is shrinking due to the sluggish and stagnant stock market. It decreased from 18.293 trillion won on the first trading day of the year to 14.851 trillion won on the 16th. On the 17th, trading volume was only 15.595 trillion won. Although it soared to 29 trillion won at the beginning of the year, raising hopes of surpassing 30 trillion won, it has since fallen below 20 trillion won.