[Cold Rice Deposit]③ Ramen Instead of Cold Rice? Hesitant Even as Asset Markets Knock

As regular savings deposits, which were as popular as freshly cooked rice until last year, lose their appeal, more and more financial consumers are turning their attention to the asset market. However, frontline private bankers (PBs) explain that many wealthy investors are still focusing on cautious investments due to growing uncertainties, such as the 'No landing' scenario raised in some parts of the U.S.

According to the Bond Information Center of the Korea Financial Investment Association on the 27th, as of the 23rd, the balance of margin loans stood at 17.5401 trillion won, an increase of about 1.5 trillion won compared to the end of the previous month (16.0944 trillion won).

Margin loans refer to investors borrowing funds from securities firms or other financial institutions using securities as collateral. This indicates a level of market optimism sufficient to invest with borrowed money. The balance of margin loans peaked at around 24.9205 trillion won at the end of August 2021 during the stock market boom but declined to 16.0944 trillion won by the end of January due to interest rate hikes and a falling market.

However, with the interest rate peak theory gaining traction this year, the margin loan balance has started to recover. In fact, the KOSPI index rose from 2225.67 at the beginning of the year to 2458.96 on the 21st.

This is due to the decreasing attractiveness of deposit products. According to the Bank of Korea, as of the end of January, domestic banks' deposit balances decreased by 45.4 trillion won compared to the previous month, while asset management companies' deposit balances increased by 51.4 trillion won.

However, the current situation is not yet considered a significant 'money move' into the asset market. Many financial consumers believe that various U.S. economic indicators continue to expand, the Federal Reserve (Fed) has signaled further interest rate hikes, and uncertainties in domestic asset markets such as stocks and real estate have not been resolved.

The size of investor deposits, classified as 'investment standby funds' in the stock market, was 46.1998 trillion won as of the 21st, which is about 3 trillion won less than at the end of last month. For now, many wealthy investors are reportedly turning to alternative investments such as low-coupon bonds, fixed-rate long-term insurance products, and dollar-denominated time deposits, which have been popular since the end of last year. When converted to deposit terms, these products offer interest rates in the high 4% to low 5% range, making them more attractive compared to deposit products that have fallen to the base rate level (3.5%).

Kim Hak-su, PB team leader at Hana Bank Jamwon Branch, said, "Although some investors have achieved returns of 20-30% since the beginning of the year due to the rising market, many customers are maintaining a wait-and-see stance amid growing uncertainties, including the 'No landing' scenario as the U.S. economy continues to expand." He added, "Especially since many are still in the loss zone from last year's downturn, expectations for stable investment returns remain high."

Jung Sung-jin, deputy head of the KB Kookmin Bank Gangnam Star PB Center, also said, "It is more accurate to say it is still a wait-and-see phase rather than a money move," adding, "Rather than significantly increasing stock allocations, the trend is to show more interest in funds investing in asset-backed short-term bonds (ABSTB), new capital securities of financial institutions, and U.S. corporate bonds."

The real estate market, a representative asset market, is also considered to be in a state of quiet movement (靜中動). Although the Bank of Korea kept the base rate steady at 3.5% on the 23rd, providing some relief to the real estate market, expectations for a 'housing price rebound' remain low.

Kim Hyo-sun, senior real estate advisor at NH Nonghyup Bank, explained, "Although uncertainties causing the housing market slump have been removed, the ongoing 'three highs' phenomenon (high interest rates, high inflation, high unemployment) makes a rebound difficult to expect," adding, "Purchases by real demand buyers who had been holding back are occurring only at a limited level."