The Korea Herald

지나쌤

Idle money grows around stock market amid risk-averse sentiment

By KH디지털2

Published : Jan. 9, 2017 - 10:38

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Idle money has grown sharply in South Korea, parked for proper investments in the stock market as investors remain cautious about risk-on assets, data showed Monday.

The volume of money sitting idle around the local equity market exceeded 107 trillion won ($88.8 billion) as of the end of 2016 according to the Bank of Korea and the Korea Financial Investment Association. 

This composite photo from Yonhap News TV refers to floating capital. (Yonhap) This composite photo from Yonhap News TV refers to floating capital. (Yonhap)

It includes 21.8 trillion won of investors' deposits and 71 trillion won in repurchase agreement balances

It marks a two-fold increase from 53 trillion won posted shortly after the outbreak of the 2007 global financial crisis.

Floating capital for investments in the stock market have since been on the constant rise from 95 trillion won at the end of 2013, 99 trillion won in 2014 and 106 trillion won in 2015.

On the other hand, the stock trading volume in the main KOSPI and the secondary KOSDAQ markets came to 2,054 trillion won last year, down 10.3 percent from a year earlier.

It means investors are losing their appetite for stock trading, despite ultra-low interest rates for bank deposits, due to financial and political uncertainties.

Rates for fixed deposits at most of the banks here have stayed at the 1-percent range since the Bank of Korea cut the policy rate to a record low of 1.25 percent in June last year.

The real estate market is also showing indications of a downturn, adding to the difficulty of finding where to invest money. (Yonhap)