[AldonSseulJap] Deposit and Savings Interest Rates 'Plummeting', Stock Market 'Frozen'... Lump Sum Money Lost Amid Financial Market Cold Wave

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Yonhap News

These days, the country is quite unsettled both domestically and internationally.

Externally, the United States is preparing for the second Trump administration,

while internally, following the declaration of martial law and the impeachment of the president,

financial market instability is increasing.

Our stock market is plummeting, and the investment environment is unfavorable,

with over 10 trillion won of standby funds unable to find investment destinations,

so despite the reduction in savings and deposit interest rates, money is flowing back into banks.

Let's take a look at where the flow of money is heading

and examine our financial environment.

Savings and deposit interest rates 'dropping'... emergence of 2% range rates

Last October, the Bank of Korea declared a pivot for the first time in about 3 years and 2 months and cut the base interest rate by 0.25%.

Then, at the Monetary Policy Committee meeting last month, another 0.25% rate cut was decided,

marking two consecutive rate cuts.

As a result, interest rates on savings and deposits at commercial banks are also falling rapidly.

As of the 15th, the 1-year maturity savings and deposit interest rates at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) are at 2.5~3.22%,

which is about 0.1~0.2 percentage points lower compared to the end of last month.

Funds flowing into banks despite lack of interest rate appeal

Yonhap News

Amid the accelerating pace of interest rate cuts,

funds are actually flowing into banks.

Following the political turmoil after the declaration of martial law, the financial market is showing instability.

It is interpreted that funds unable to find suitable investment destinations are flowing into banks.

As of the 10th, the balance of demand deposits (including MMDA) at the five major commercial banks was 611.804 trillion won.

Demand deposits are funds that can be withdrawn or deposited at any time,

and are classified as standby investment funds.

The demand deposit balance increased by a whopping 11.5425 trillion won within a week compared to 600.2615 trillion won on the 3rd, when President Yoon Seok-yeol declared martial law.

Not only has the demand deposit increased, but despite lower interest rates,

large sums of money are also flowing into savings and deposits.

Since there are no suitable investment options, it seems people are seeking safe investment destinations even with low interest rates.

Moreover, as our stock market is also weak,

investor deposits, considered standby funds in the stock market,

increased from 49.8987 trillion won on the 3rd to 52.5129 trillion won on the 10th.

Margin trading also at record lows

The increase in investor deposits, which are standby funds for the stock market, and demand deposits, which are standby investment funds,

means that suitable investment destinations could not be found.

Usually, when the stock market is booming, demand for leveraged investments increases,

and 'debt investment' (borrowing to invest) also rises.

Recently, as our stock market has been weak, margin trading has hit record lows.

According to the Korea Financial Investment Association, as of the 10th, the outstanding credit balance in the KOSPI and KOSDAQ markets was 15.7467 trillion won.

This is the lowest since August 27, 2020 (15.8785 trillion won).

The outstanding credit balance refers to the amount investors have borrowed from securities firms to invest but have not yet repaid,

and the lower the amount, the more it indicates weakened investor sentiment.

Can't emigrate to the US, but assets are moving to the US

Due to domestic political instability, preference for overseas assets is increasing.

It appears that more 'Seohak Ants' (Korean investors in US stocks) have chosen US stocks as a safe haven for assets.

According to the Korea Securities Depository, as of the 11th,

the custody amount of US stocks reached approximately 113.78513 billion dollars (about 163 trillion won).

This is an all-time high.

This has steadily increased since the declaration of martial law.

From 107.04735 billion dollars on the 3rd, to 109.17226 billion on the 4th, 109.73281 billion on the 5th, 112.14039 billion on the 6th, 110.54973 billion on the 9th, and 110.15624 billion on the 10th, the amount has gradually risen.

Despite soaring exchange rates,

the US stock market is experiencing an unprecedented boom.