Swarmed in carrying 80 trillion in capital… Places drawing in investors' pooled funds

Investor deposits 80 trillion 'record high'

U.S. stock net purchases 2.4 trillion won

Warning over 'debt-financed investing' overheating

The Korean and U.S. stock markets are creating a dual boom, simultaneously drawing in large pools of money from domestic investors. Cash circulating in the market is flowing into the stock market.

According to the Korea Financial Investment Association on the 18th, investor deposits, standby funds for the stock market, reached a record high of 80.1901 trillion won on the 13th, and after declining somewhat, stood at 76.5374 trillion won on the 16th.

Investor deposits are the total balances that customers have left in securities firm accounts; they are often likened to the 'amount of ammunition to be used for investment' and increase in proportion to expectations of stock price gains. The previous record for investor deposits was 77.0918 trillion won on May 3, 2021.

Another indicator of stock price expectations, margin loan balances, surged to 23.8288 trillion won on the 15th, marking the highest level since November 2021. Margin loans refer to borrowing money from securities firms to buy stocks; such 'debt investing' tends to be active in rising markets. The Korea Financial Investment Association and the Korea Exchange issued a joint press release on the 17th saying that credit lending for young people and those in their 50s–60s is rapidly increasing amid the stock market boom, and they urged caution over overheating of loan-based investing.

Domestic investors net purchased USD 1.68 billion (about 2.3856 trillion won) worth of U.S. stocks in the most recent week (10–16). Compared with net purchases of USD 1.24 billion in the previous Chuseok holiday (3–9), this is about a 35% increase.

The most popular U.S. holding over the past week was the "Direction Daily Semiconductor Bull 3X" ETF, which amplifies semiconductor sector returns threefold, with net purchases of USD 220 million (312.6 billion won). The second and third largest net purchases were AI semiconductor leader NVIDIA (USD 180 million) and cryptocurrency miner Iris Energy (USD 130 million), respectively.

The KOSPI closed above the 3,600 level on the 15th and then broke through the 3,700 level on the 16th, heightening expectations that a '4,000-KOSPI' breakthrough is near. The U.S. benchmark S&P500 also continued an upward trend, buoyed by advances in major AI tech stocks and hopes for interest rate cuts, rising 1.2% over the week.

In the securities industry, while the possibility of short-term adjustments and variables such as Korea-U.S. trade negotiations remain, the prevailing view is that the boom will likely continue in the broad sense. Many also expect that the positive trend in the U.S. market will be difficult to derail despite caution over trade disputes with China and AI earnings bubbles.

Lee Kyung-min, a researcher at Daishin Securities, said, "Although U.S.-China tensions have recently escalated, optimistic interpretations that this is part of 'securing negotiation cards' ahead of the summit are dominant," and added, "Going forward, the U.S. will have key watch points in whether tech stock momentum (rebound driver) continues and whether major companies meet expectations for their earnings guidance at third-quarter results announcements."

Ahn Hye-won, Hankyung.com reporter anhw@hankyung.com