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(LEAD) Koreans' excess funds fall in Q2 amid economic recovery

All News 14:23 October 08, 2021

(ATTN: UPDATES with more details in paras 10-11; ADDS photo)

SEOUL, Oct. 8 (Yonhap) -- Excess funds held by South Korean households and nonprofit agencies fell in the second quarter from a year earlier as private spending rose and home purchases increased amid the economic recovery, central bank data showed Friday.

Net financial funds -- the value of financial assets minus financial liabilities -- held by local households and nonprofit organizations serving households amounted to 24.5 trillion won (US$20.5 billion) in the April-June period, down from 62.8 trillion won a year earlier, according to the Bank of Korea (BOK).

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

This photo, taken Sept. 1, 2021, shows shoppers at a traditional market in Seoul. (Yonhap)

Their excess funds declined as slumps in private spending eased and more housing purchases were made amid skyrocketing home prices, according to the BOK.

Private spending grew 3.6 percent on-quarter in the second quarter, accelerating from a 1.2 percent on-quarter gain three months earlier, according to separate data by the central bank.

Households and non-profit organizations borrowed money worth 56 trillion won in the second quarter, up from 46.4 trillion won the previous year.

More Koreans took out loans from banks to buy houses and invest in stocks, spawning concerns about snowballing household debt.

In the cited period, the value of funds management reached 80.5 trillion won, down from 109.2 trillion won a year earlier, as they put less money in bank deposits.

People's frenzy for stock investment continued last quarter, the data showed. Households and non-profit agencies invested in local and foreign stocks worth a combined 32 trillion won, less than 49 trillion won in the first quarter.

The outstanding value of households' stockholding came to 1,031.9 trillion won as of end-June. It marked the first time that the reading topped the 1,000 trillion-won mark.

Of households' financial assets, the proportion of stocks and funds accounted for a record high of 21.6 percent in the second quarter, up from 20.3 percent in the first quarter.

Local companies' net borrowing narrowed on-year as their sales increased amid robust exports, the BOK said.

Net borrowing of non-financial enterprises came to 22 trillion won in the second quarter, compared with fund shortage of 29.6 trillion won a year earlier.

The South Korean economy is on a recovery track on the back of solid exports.

The latest uptick in COVID-19 cases has increased uncertainty for the recovery of private spending, but it does not appear to be serious enough to derail the economic growth.

A signboard at a dealing room of Hana Bank in Seoul shows that the KOSPI benchmark stock index started higher on Oct. 8, 2021. (Yonhap)

sooyeon@yna.co.kr
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