Listed Stock Turnover Rate 0% on 18th and 19th... First Time in 3 Years and 7 Months
Market Capitalization Turnover Also Hits Lowest Record... "Trading Drought Recovery Unlikely"
[Asia Economy Reporter Lee Seon-ae] The domestic stock market is groaning under a "trading cliff." As individual investors continue to withdraw their funds amid the bear market, not only has the trading volume plummeted, but even the remaining funds have disappeared from stock trading. This means that individual investors who had massively entered the market during the COVID-19 pandemic have virtually left the stock market stage, and those who remain are not engaging in stock trading. Turnover rates of listed stocks, market capitalization turnover rates, and trading volumes have all reverted to pre-COVID-19 levels, setting record lows, indicating that investor sentiment has frozen solid and lost vitality.
According to the Korea Exchange on the 27th, the turnover rate of listed stocks across the entire market (KOSPI + KOSDAQ + KONEX) recorded 0.95% and 0.98% on the 18th and 19th, respectively. The turnover rate of listed stocks refers to the proportion of stocks that were bought or sold among all listed stocks. Recording a turnover rate in the 0% range is the first time since December 11, 2018 (0.94%). Although it recorded 2% levels such as 2.95% on April 5 this year, it began to decline gradually from June. On the 26th and 25th, it remained at 1.14% and 1.08%, respectively. This essentially means that individual investors have withdrawn from investing after suffering significant losses in the first half of this year.
The market capitalization turnover rate also hit a new low. The KOSPI market capitalization turnover rate for this month (calculated up to the 26th) was 6.79%. It is the first time since October 2019 (6.71%) that the KOSPI market capitalization turnover rate has fallen to the 6% range on a monthly basis.
Last month, the KOSPI market capitalization turnover rate was 9.17%, the lowest since January 2020 (8.69%). This month, it broke the record low set last month again. The market capitalization turnover rate is calculated by dividing the total trading volume by the average market capitalization; a lower figure indicates less active trading.
The market capitalization turnover rate exceeded 10% starting February 2020, when the liquidity-driven market began due to the COVID-19 crisis, and surged to 24.87% in January last year. For the entire market (KOSPI + KOSDAQ + KONEX), this month's market capitalization turnover rate is 10.77%, barely maintaining double digits. This is the first time since December 2019 (10.92%) that it has recorded a double-digit figure.
Trading volume is also decreasing day by day. The total trading volume of the entire market (KOSPI + KOSDAQ + KONEX) has fallen to the 11 trillion won range. It was 11.456 trillion won on the 25th and 11.616 trillion won on the 26th. This is the lowest record since February 10, 2020, when it was 10.302 trillion won. On a monthly basis, the average daily trading volume has dropped to the 12 trillion won range for the first time in about 29 months since February 2020, fluctuating between 12 trillion and 13 trillion won.
This trading drought is expected to continue for the time being. Due to many variables such as additional interest rate hikes, recession concerns, and declining corporate earnings in an uncertain environment, it is judged that it will be difficult to aggressively pour funds into the stock market before a full-fledged rebound phase. Kang Dae-seok, a researcher at Yuanta Securities, pointed out, "An unusual phenomenon has occurred where the monthly average trading volume relative to the KOSPI market capitalization has remained in the negative zone for 17 consecutive months," adding, "The seriousness of the decrease in trading volume and stock market peripheral funds is increasing." A senior official in the financial investment industry said, "Individual investors who entered the stock market for the first time after COVID-19 have all turned their backs on the bear market they are experiencing for the first time," and added, "We believe that the recovery of stock market trading funds will not be easy for the time being."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
