【Youth Daily】 The craze for stock investment, such as the’Donghak·Seohak ant movement’, recorded the highest level of stock investment and debt at the same time in the third quarter of last year. A large part of household stock investment is supported by the so-called’debt investment’ made through loans.
According to the statistics of the’financial circulation in the third quarter of 2020′ released by the Bank of Korea on the 7th, the net fund management amount of households (including individual business owners) and non-profit organizations was KRW 30 trillion. This is about half of the second quarter (64 trillion won), but it is more than 14 trillion won compared to the third quarter of 2019 (16 trillion won).
The net fund management amount is the amount of money raised by the economic entity minus the amount of funds raised. In general, households supply surplus money to other economic entities such as companies or governments by means of deposits or investments while the amount of net funding is positive (+).
The fact that households’ net fund management in the third quarter of last year increased compared to the same period in 2019 means that the increase in the amount of extra money used for investments and deposits was greater than the amount of financing such as loans.
According to the report, the total amount of money managed by households without considering the amount of procurement was estimated at 83.8 trillion won. It decreased from the second quarter of last year (110 trillion won), which was the largest in history, but it is still twice that of a year ago (40 trillion won).
Looking at the fund management sector in detail, in particular, equity securities and investment funds (excluding shares issued by non-residents of KRW 22 trillion and non-residents) surpassed the record high (21 trillion KRW) in the previous second quarter. It is more than 23 trillion won compared to the third quarter of 2019 (800 billion won).
The amount of investment in households issued by non-residents (overseas stocks) (8.3 trillion won) was the largest ever. In the end, it can be seen that households invested about 31 trillion won (22.5 trillion + 8.3 trillion won) in both domestic and overseas stocks in the third quarter of last year.
Bond investment also increased from 400 billion won to 9.7 trillion won in one year. However, it did not reach the record for the second quarter of last year (1.1 trillion won).
Deposits of financial institutions such as deposits (24.5 trillion won) decreased by 51% from the previous 2nd quarter (49.8 trillion won), which was similar to last year’s 3rd quarter (27.3 trillion won).
At the same time during the same period, households raised 53.2 trillion won of financing, of which financial institution borrowings were the largest with 52 trillion won. This is the highest quarterly record since statistics were compiled in 2009.
“The increase in the scale of fund management by households and non-profit organizations appears to be due to the increase in investment capital management in accordance with the rise of the stock market.” “Overseas stocks) investments were all the largest in the third quarter.”
In addition, he added, “The borrowing of financial institutions by households and non-profits is also the highest record ever. The borrowing was mainly influenced by housing-related funds, stock investment funds, and demand for livelihoods due to uncertainty.”
Regarding the relationship between increased borrowing and less deposits than in the second quarter and investment in stocks, he said, “Although the subsistence part worked as well, but in financial institution borrowing, there was also a demand for housing funds and stock funds due to the increase in housing transaction volume. As management continues to decline and it is only being operated for a short time, it cannot be seen that some deposits are not missing from stock investment.”
In the case of non-financial corporations, the amount of net financing was 1.49 trillion won, down from 2,900 billion won in the third quarter of 2019 (17 trillion won). Companies generally have a’net funding’ state where the amount of net funding is negative (-) because the amount of funding is higher than that of funding.
The company’s financing in the third quarter of last year was 38 trillion won, an increase of 12 trillion won from a year ago (26 trillion won). In particular, the amount of borrowings from new financial institutions in one year surged from 15 trillion won to 42 trillion won, about 2.7 times.
During the same period, the company’s fund management amount (23 trillion KRW) increased by about 15 trillion KRW from the third quarter of 2019 (8 trillion KRW).
In the case of the government, the amount of funds raised in the third quarter was 8 trillion KRW more. However, compared to the third quarter of 2019 (16.4 trillion won), the scale of net funding has decreased.
Overseas operation amount increased from 5 trillion won to 13.3 trillion won, and government loans increased from 1.3 trillion won to 5 trillion won.
The government’s financing in the third quarter of last year was mainly through issuance of government bonds (net issuance of 26 trillion won).
“In the third quarter of last year, taxes that were deferred from last quarter were introduced, and government income increased. However, due to active financial execution such as the third and fourth supplementary budgets (additional correction budget), government consumption and relocation expenditures increased significantly. “The scale of fund management has been reduced.”
Looking at the balance of financial assets and liabilities of each economic entity at a certain point, not the flow of funds, as of the end of the third quarter, the net financial assets of households, businesses, and governments were 233.3 trillion won, 91 trillion won, and 750 trillion won, respectively. Compared to the end of the second quarter, it increased 88.2 trillion won, 61.2 trillion won, and 40 trillion won respectively.
The ratio of financial assets (432.5 trillion won) to household financial liabilities (199.2 trillion won) was calculated at 2.17 times, the highest since the fourth quarter of 2017 (2.17 times).
【Youth Daily = Reporter Inara】
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