Korean Investors Pile Into Credit-Line Borrowing as Kospi Hits Records

A 40-year-old office worker surnamed Lee has been drawing on an overdraft account to invest in stocks. “Rather than put money into deposits or savings products that pay only around 3% a year, I thought it made more sense to pay overdraft interest and seek returns through stock investment,” Lee said. He plans to buy more Samsung Electronics Co. and SK Hynix Inc. if their shares pull back.

As the Kospi keeps setting record highs, outstanding overdraft balances at South Korea’s five largest banks have climbed to their highest level in three years and four months. Demand deposits, often viewed as cash waiting on the sidelines, are also shrinking. The trend reflects the spread of debt-fueled stock investing as tighter property regulations curb mortgage borrowing.

Outstanding overdraft balances at KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH NongHyup Bank stood at 40.5029 trillion won as of May 7, according to the financial industry on May 10. The balance, which measures funds already drawn down, rose by 715.2 billion won from 39.7877 trillion won at the end of April in just three business days.

That was the highest month-end-comparable level since January 2023, when the total stood at 40.5395 trillion won.

Even though May data cover only three business days, the 715.2 billion won increase was the largest monthly rise since October 2023, when balances grew by 872.6 billion won.

Overdraft balances began rising in earnest around October 2025 and returned to the 40 trillion won range at the end of November, reaching 40.0837 trillion won. The increase came as a series of property measures, including the June 27 and Oct. 15 steps, reduced limits on mortgage loans. The balance later slipped back into the 39 trillion won range as year-end and New Year bonus payments flowed in, but surged again as the Kospi continued to set fresh records.

The same pattern is evident in demand deposits, with more than 500 billion won leaving banks in May. Demand deposits at the five banks stood at 696.0511 trillion won as of May 7, down 501.3 billion won from 696.5524 trillion won at the end of April. That followed a 3.3557 trillion won decline in April, extending the drop in funds parked at banks.

The financial industry says the shift had already been visible as short-term funds in money market funds, or MMFs, and cash management accounts, known as CMAs, increased.

“There is a clear structural shift in fund flows in South Korea’s financial markets,” Kim Yoo-mi, an analyst at Kiwoom Securities, said. “Bank funding is moving from savings deposits into demand deposits, while concentration in short-term standby funds such as MMFs and CMAs is also intensifying.”

“That suggests market liquidity has built up substantially compared with the past,” she added. “It also shows that potential liquidity that could become a meaningful variable for stock-market supply and demand is expanding if confidence in equities takes hold.”

Oh Jung-min, Hankyung.com reporter blooming@hankyung.com