Households shift money from deposits to stocks

Export and import cargo is stacked at Sinseondae Pier in Busan Port. [Yonhap]
Export and import cargo is stacked at Sinseondae Pier in Busan Port. [Yonhap]

A semiconductor boom drove net financial assets held by non-financial corporations to a record 67.1 trillion won ($49.9 billion) in the second quarter, the largest since records began. Over the same period, households visibly shifted money out of bank deposits and into stocks and investment funds — a trend known as "money move."

According to the Bank of Korea's preliminary flow-of-funds statistics released Wednesday, non-financial corporations posted net financial assets of 67.1 trillion won in the second quarter, up 46.2 trillion won from 20.8 trillion won in the first quarter. It was the largest figure since the central bank began compiling the data in the first quarter of 2009.

Gross financial assets of non-financial corporations jumped from 137 trillion won in the first quarter to 267.1 trillion won in the second quarter. Deposits at financial institutions accounted for 84.3 trillion won, bonds for 16.3 trillion won, and equity securities and investment funds for 21.5 trillion won.

"Net profit for the period among listed companies rose from 111 trillion won in the first quarter to 189 trillion won in the second quarter," said Kim Yong-hyun, head of the Bank of Korea's flow-of-funds team, attributing the gain to expanded net profits at chipmakers such as Samsung Electronics and SK hynix. He added that strong semiconductor exports boosted corporate earnings, which in turn expanded net financial assets and prompted companies to increase their financial activity with the surplus cash.

Households — including sole proprietors — and nonprofit organizations posted net financial assets of 60.7 trillion won in the second quarter, down 18.5 trillion won from 79.2 trillion won in the first quarter. The Bank of Korea said the decline reflected lower household income and increased net acquisition of housing.

Gross household financial assets, excluding liabilities, also fell by nearly 8 trillion won to 88.5 trillion won in the second quarter from 96.3 trillion won in the first. Deposits at financial institutions swung sharply, from a positive 29.4 trillion won to negative 23.3 trillion won.

By contrast, household investment in domestic and foreign equity securities and investment funds rose from 61.4 trillion won to 101.6 trillion won. Holdings of resident-issued shares climbed from 18.3 trillion won to 67.2 trillion won, and investment fund shares increased from 28.5 trillion won to 35.6 trillion won. Holdings of non-resident-issued shares, however, fell from 14.5 trillion won to negative 1.3 trillion won.

The ratio of household financial assets to financial liabilities rose to a record 2.78 times in the second quarter from 2.6 times in the first, driven in part by higher equity valuations. Kim said short-term savings deposits at deposit-taking institutions fell by 33.6 trillion won and long-term savings deposits dropped by 5.4 trillion won, while both resident-issued share holdings and investment fund shares hit all-time highs. "The money-move trend was clearly visible in the second quarter," he added.

The ratio of household debt to nominal GDP stood at 81.1 percent at the end of the second quarter, down 4.2 percentage points from 85.3 percent at the end of the first quarter — the lowest since the second quarter of 2016, when it was 80.2 percent.

The general government sector also swung from a net borrowing position of negative 23.3 trillion won in the first quarter to a net lending position of 11.1 trillion won in the second quarter.

"While nominal GDP grew 6.2 percent, household debt rose only 1.1 percent," Kim said. "There is a possibility that the household debt ratio will fall below the government's target of 80 percent before the end of this year."


kimstar@heraldcorp.com