KOSPI stocks experienced a sharp decline in trading activity on July 13, with daily average trading volume falling to 37.2639 trillion won for the week of July 6-10, down from a peak of 59.8994 trillion won during June 1-5. The decline was driven by reduced retail investor participation, with their trading proportion dropping from 37.3% to 31.3% over the same period. The Korean stock market faced intensified selling pressure as investor deposits decreased to 105.5758 trillion won as of July 10, marking the lowest level since February 20.
KOSPI Trading Volume Drops to 37 Trillion Won
According to the Korea Exchange on July 13, weekly average daily trading volume on KOSPI peaked at 59.8994 trillion won during June 1-5 before steadily declining to 37.2639 trillion won for the week of July 6-10. This marked the first time weekly average daily trading volume fell to the 30 trillion won range since the third week of May, when the index slipped to 7208.95 from challenging the 8000 level, recording 39.4776 trillion won. On June 22, when weekly average daily trading volume reached 52.9617 trillion won, KOSPI recorded its all-time high closing price of 9114.55.
Retail investor participation in total KOSPI trading dropped from 37.3% during June 1-5 to 31.3% during July 6-10. A securities firm CEO stated, "The decline in market trading volume has been evident since last month. We judge that both stock price momentum and trading volume have passed their peaks."
Investor Deposits Fall to 105 Trillion Won
Investor deposits, considered standby funds for the stock market, reached 105.5758 trillion won as of July 10, the lowest level since February 20 when deposits stood at 104.1291 trillion won. Deposits have declined for nine consecutive trading days since June 29, when they totaled 132.4697 trillion won. Considering the decline on July 13, deposits may have fallen below the 100 trillion won mark.
KOSPI PER Reaches 6.36x Near 2008 Crisis Low
According to FnGuide, KOSPI's 12-month forward price-to-earnings ratio (PER) based on the closing price on July 13 reached 6.36x, approaching the 6.3x recorded during the 2008 financial crisis. This figure is lower than the 7.5x during the 2020 COVID-19 pandemic and the 7.6x during the 2018 US-China trade conflict. In contrast, corporate fundamentals remain solid, with the operating profit forecast for KOSPI-listed companies standing at 970.8568 trillion won for this year, up 5.27% over the past month.
Analysts Lower Support Level Forecasts
Experts have been unable to identify a clear cause for the index decline and are lowering their support level projections. Yang Hyeong-mo, a researcher at DS Investment & Securities, stated, "Since June, the market has been transitioning from price formation based on unconditional growth to a phase of reevaluating capital efficiency and cash flow. The current market skepticism is interpreted as an adjustment phase for the next stage, but because the peak was high, the trough is inevitably deep."
FAQ
What caused KOSPI stocks trading volume to decline in July?
KOSPI stocks trading volume dropped from 59.8994 trillion won during June 1-5 to 37.2639 trillion won during July 6-10, driven by reduced retail investor participation, which fell from 37.3% to 31.3% of total trading over the same period.
How low did KOSPI's valuation fall on July 13?
KOSPI's 12-month forward PER reached 6.36x based on the closing price on July 13, approaching the 6.3x recorded during the 2008 financial crisis and marking the lowest valuation level in KOSPI history.
