Rising Trading Volume and Deposits Again... Will the KOSPI Summer Rally Gain Momentum?

Average Daily Trading Value Exceeds 26 Trillion Won for the First Time Since April
Investor Deposits, Market Liquidity Funds, Rise Again
KOSPI Expected to Attempt Breakthrough of 2800 Level... Selling Pressure at 2600 Level

Recently, as the stock market has emerged from a correction and recovered the 2600 level, the previously sluggish trading volume is also increasing. With the inflow of funds into the stock market showing an upward trend, there is growing interest in whether the KOSPI will rise further.

According to the Korea Exchange, the combined average daily trading volume of the KOSPI and KOSDAQ in July exceeded 20 trillion won, reaching 21.6276 trillion won as of the 14th. The average daily trading volume started at 13 trillion won in January and expanded to 26 trillion won in April amid the early-year market rally. After undergoing another correction, it slowed to 18 trillion won in May and 19 trillion won in June, but recently, with the market showing strength again, it has risen back to the 20 trillion won range. On the 14th, when the KOSPI recovered the 2620 level, the trading volume recorded 26.6211 trillion won, surpassing 26 trillion won for the first time since April.

Trading volumes by market are also on the rise. The average daily trading volume of the KOSPI this month reached 11 trillion won, the highest level since April. The KOSDAQ also recovered to double digits with 10.6119 trillion won.

Funds flowing into the stock market are also increasing. According to the Korea Financial Investment Association, as of the 13th, investor deposits (excluding on-market derivatives trading deposits) stood at 53.4847 trillion won. Investor deposits had exceeded 55 trillion won on the 3rd but moved around 50 to 51 trillion won after the KOSPI fell below the 2600 level.

With trading volumes increasing and investor deposits, which can be considered as standby funds for the stock market, rising again, it is expected to provide upward momentum for the KOSPI. After undergoing a correction, the KOSPI has recently risen for consecutive days, reclaiming the 2600 level, fueling expectations for a summer rally.

Lee Kyung-min, a researcher at Daishin Securities, said, "After confirming support at the 2510 level, the KOSPI showed a strong rebound of more than 110 points," adding, "Having quickly recovered the 2600 level, it is now time to focus on whether it will break through the previous high (intraday high of 2650 points) and the future direction of the KOSPI." He continued, "Although there will be fluctuations during the process of breaking through and settling above the previous high, the KOSPI is expected to attempt to surpass the 2800 level in July and August."

In a situation where risk appetite is strengthened, if the economic recoveries of the U.S. and China join in, the stock market is expected to gain further strength. Kim Dae-jun, a researcher at Korea Investment & Securities, said, "With the strengthening of risk-on sentiment, the market can move further," and added, "If the U.S. economic recovery and enhanced stimulus in China occur amid a weak dollar, the KOSPI will move higher."

However, a thick supply zone remains a burden. Choi Yoo-jun, a researcher at Shinhan Investment Corp., said, "The 2600 level is the second thickest supply zone since 2022," and expressed expectations that "the supply will be absorbed through the earnings season."

From a supply-demand perspective, there is also an opinion that the recovery of the Chinese economy is necessary for foreign buying, which supports the stock market's upward trend, to revive. Foreign buying, which has led the domestic stock market's rise this year, has slowed down this month. Researcher Lee Kyung-min said, "If a tailwind from China is added to the domestic fundamentals, the pressure for the yuan and won to strengthen will increase, leading to net foreign buying and driving the KOSPI higher," analyzing, "The cyclical structure of China’s economic stabilization → easing of yuan depreciation → alleviation of won depreciation pressure and transition to strength → improvement in foreign demand is important."