When Corona 19 landed in Korea in March 2020, the stock market fluctuated. Institutional investors and foreigners caught in a sense of fear began to ‘throw to sell’, and the KOSPI index was pushed down to the 1,400 line. Major owner Samsung Electronics also fell to a low of 40,000 won.
The panic did not last long. As central banks around the world, including the US, began to aggressively ease money, the market showed a ‘V-shaped rebound’ and quickly recovered. In January 2021, the KOSPI broke the 3,000 mark for the first time in history amid growth stocks such as BBIG (battery, semiconductors, internet, game). The ‘Donghak Ants’, who supported the stock price even during the crash, were jubilant.
Deputy Kim, who was attending a major corporation in Seoul at the time, was in trouble. This is because I have never done anything other than savings and savings. When my colleagues and friends shouted ‘Gazah’ and started investing in stocks, I experienced FOMO (fear of missing out). I also felt a sense of relative deprivation when I heard the news that a friend of an acquaintance was making a lot of money with cryptocurrency. Even now, I was impatient whether I should join the money movement (moving money from safe assets to risky assets).
After much discussion, he decided not to withdraw money from savings and savings accounts. The reason was simple. “Even if you can’t win, don’t lose.” I decided that the results would not be good when I invested according to others. Instead, we decided to start investing in public offering stocks and make a small profit.
Almost two years have passed and the situation has changed 180 degrees. Interest rates jumped quickly as the US central bank (Fed) tightened sharply, and the stock market shrank sharply. People who used to say “saving is stupid” have changed their mind to “cash is best”. Looking at his colleagues at the top, Deputy Kim smiled softly, saying, ‘In the end, I’m the winner.’ Deputy Kim is preparing to convert the pre-maturity deposit into a yield that is more than double the current interest rate.
Unlike Deputy Kim, his colleagues are crying. We are withdrawing our deposits while continuing the ‘stop shedding tears’. After the bear market continued, he decided to exit the market. The rest of the money is poured into high interest savings accounts. This is what is known as ‘reverse money transfer’. According to the Financial Investment Association, as of the 17th of last month, deposits from investors in the stock market were 49.42 trillion won, a decrease of more than 22 trillion won this year.
On the other hand, deposits and savings account recorded the highest increase ever. The Bank of Korea announced that regular deposits and savings accounts increased by 34.1 trillion won in August compared to the previous month. This is the biggest increase since December 2001, when the count began. As interest rates on savings bank deposits and savings accounts climb into the mid 6% range, it is expected that funds will continue to move to the bank for the time being.
What about the stock price of a bank stock that absorbs the ants’ money? The big four financial holding companies, which are due to announce their third quarter earnings next week, have risen an average of 4-8% this month. From the closing price on the 20th, Woori Financial Group rose the most with an increase of 8%, followed by Shinhan Financial Group (6%), Hana Financial Group (5%) and KB Financial Group (4%).
In terms of the investment view, the outlook for the stock market is mixed. Kim Ji-young, a researcher at Kyobo Securities, said, “The net profit of major financial holding companies in the third quarter is expected to increase by nearly 6% compared to the same period of the previous year.” Researcher Kim continued, “Amid the forecast of an economic downturn, there are also concerns about the performance of banks due to the deterioration of the business environment,” he added.
On the other hand, some point out that the surge in interest rates is no longer a boon for banks. Choi Jeong-wook, a researcher at Hana Securities, said, “Korean banks are inevitably under increasing pressure to cut the loan-to-deposit interest rate differential due to the sudden increase in borrowers’ interest burden. Researcher Choi also advised, “The firm trend of US banking stocks may temporarily highlight the attractiveness of domestic banking stocks, but it should be remembered that rising interest rates are not a positive factor for banking stocks in the medium to long term . – term.”
By Park Byung-jun, staff reporter real@hankyung.com
