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S. Korean households’ stock investment hits record-high

  • Published : Apr 8, 2021 - 15:30
  • Updated : Apr 8, 2021 - 15:39
(Yonhap)
South Korean households spent a record-high net 83.3 trillion (74.5 billion) won in stock investment last year, central bank data showed Thursday, but their borrowing also surged to an unprecedented level, indicating where their money for investment came from.

Amid the COVID-19 pandemic, local households and nonprofit agencies serving households invested a total 63.2 trillion won in Korean stocks and 20.1 trillion won in overseas shares in 2020, according to the preliminary data by the Bank of Korea. The readings surpass each previous record-highs of 21. 8 trillion won in 2018 for local stocks and 2.1 trillion won in 2019 for foreign stocks.

The reading did take fund investments into account.

Backed by a record-high benchmark interest rate of 0.5 percent and volatile investor sentiment stemming from COVID-19 risks, Korean investors have been expanding their stock investment portfolios with borrowed money.

Households and the non-profit organizations borrowed a record-high net 173.5 trillion last year.

“The households’ borrowing has increased and funds have flowed to high-profit financial assets such as stocks,” a BOK official said.

According to a separate BOK data, the nation’s household debt reached 1,726.1 trillion won as of the end of 2020, up 7.9 percent from the previous year. Noting the gaining momentum, financial authorities have been scurrying to implement plans put a brake on debt growth.

At the same time, excess funds held by households and the nonprofit agencies overall more than doubled on-year in the cited period, the BOK said. An extended slump in private consumption contributed to the latest reading, it added.

Net financial funds -- the value of financial assets minus financial liabilities -- held by local households and the nonprofit organizations totaled 192.1 trillion-won last year, compared with 92.2 trillion won in 2019, the data showed.

Excess funds point to the volume of money that remains on the balance sheets of households after people manage available funds via deposits, stock investments and other similar means.

By Jung Min-kyung (mkjung@heraldcorp.com)
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