Household Financial Assets in Q2: Stocks Down, Deposits Up... Non-Financial Corporations' Net Lending Volume Surges

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] As the stock market has continued to slump this year, the proportion of stocks within household financial assets has decreased, while the share of safe assets such as savings deposits has increased. In the case of non-financial corporations, the demand for working capital has risen due to the increase in raw material prices, leading to a significant expansion in net fund procurement.

According to the '2022 Q2 Financial Flow (Provisional)' statistics released by the Bank of Korea on the 6th, the net fund operation scale in the domestic sector was 8.5 trillion won, down from 14 trillion won in Q2 last year.

The net fund operation amount for households (including self-employed) and non-profit organizations was recorded at 39 trillion won, an increase of 14.5 trillion won compared to 24.5 trillion won in Q2 last year. Although consumption increased due to the lifting of social distancing measures, household income, including transfer income, rose significantly, expanding the scale of net operation into financial assets.

Due to rising loan interest rates and strengthened loan regulations, the scale of fund procurement was 41.9 trillion won, significantly reduced from 55.6 trillion won in Q2 last year.

Fund operation in Q2 this year was 80.9 trillion won, up from 80.1 trillion won in Q2 last year. Influenced by rising interest rates and a preference for safe assets, long-term savings deposits and bonds increased by 17.5 trillion won and 0.5 trillion won respectively, greatly expanding the year-on-year growth, whereas stocks (24.8 trillion won) and other deposits (-5.9 trillion won) decreased.

Looking at the proportion of products within household financial assets, deposits accounted for the highest at 43.1%, followed by stocks at 18.5%.

For non-financial corporations, the demand for working capital increased due to rising raw material prices, expanding the net fund procurement scale to 46.9 trillion won, a significant increase compared to 19.4 trillion won in the same period last year. Due to deteriorating conditions in the corporate bond market, strengthened corporate loan handling by financial institutions, and rising interest rates, the scale of fund procurement increased mainly through short-term loans.

Corporate loans in Q2 this year increased by 56.4 trillion won, expanding the growth compared to 49.3 trillion won in Q2 last year.

Fund operation was 48.5 trillion won, down from 59.6 trillion won in Q2 last year. While savings deposits and direct investment operations expanded, operations centered on settlement deposits decreased.

The general government's net fund procurement in Q2 was recorded at 15 trillion won. Moon Hye-jung, head of the Financial Flow Team at the Bank of Korea's Economic Statistics Bureau, said, "The government's net procurement scale shifted from net operation to net procurement as government spending expanded due to COVID-19 quarantine measures and supplementary budgets."