Stock deposits in Korea near record high in renewed retail fad

2020.11.19 11:37:00 | 2020.11.19 12:49:20

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The return of foreigners to the Korean stock market has not intimidated retailers as stock deposits reached a new brim amid revived market vitality on expectations for Covid-19 vaccine and cure arrivals.

According to the Korea Financial Investment Association, the outstanding balance in stock deposits reached 63.11 trillion won ($56.8 billion) as of Wednesday, closing in on the historic high of 63.26 trillion won set on Sept. 4.

The outstanding balance added 10 trillion won, or 18.3 percent, so far this month. The balance ebbed to 55 trillion won last month and stopped at 51 trillion won earlier this month.

Borrowing for stock purchases also jumped accordingly.

The outstanding balance in margin accounts amounted to 17.24 trillion won as of Tuesday, the largest in a month.

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A margin account is an account provided by brokerage houses to allow investors to borrow cash from a brokerage house to buy stocks or other financial products. The balance usually goes up when retail investors borrow money to buy stocks on expectations of making money through the gap from stock gains.

Brokerage houses have been restricting lending from September amid the growth in staggering pace.

Korean stocks gained traction after breaking a two-year high on a string of positive news such as Korea’s final agreement on the Regional Comprehensive Partnership (RCEP), a mega trade deal in the Asia Pacific region initiated by China, and expectations for breakthroughs in Covid-19 vaccine development.

The Kospi that hovered around 2,300 early this month broke 2,500 on Monday for the first time since May 3, 2018. It gained more than 10 percent this month alone and finished Wednesday at 2,545.64. Tech-savvy Kosdaq also gained almost 6 percent to 851.74 during the period.

By Pulse

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