Domestic stock trading in South Korea dropped by 13% last year, while trading in overseas stocks saw a significant increase, driven by individual investors shifting from the Korean market to the U.S. stock market.
Retail investors’ trading volume of domestic stocks last year dropped by 13%, from 730.38 billion shares in 2023 to 635.25 billion shares, according to data from the Financial Supervisory Service and nine major securities firms (Mirae Asset, Hana, Samsung, Kiwoom, NH, KB, Shinhan, Toss, and Kakao Pay Securities) obtained by Democratic Party lawmaker Kim Hyun-jung on Feb. 6. This marks a 48.3% decline compared to the surge in trading volume during the COVID-19-driven investment boom of 2021, when 1.228 trillion shares were traded.
In contrast, foreign stock trading volume increased substantially, jumping 89.6% from 59.31 billion shares in 2022 to 112.43 billion shares in 2023, and further grew by 39.1% to 156.41 billion shares last year.
Despite the government’s efforts to boost Korean stock values with its value-up policy since early last year, investors’ shift to foreign markets was largely driven by the poor performance of the domestic market compared to major global markets. Issues related to corporate governance, such as the restructuring of the Doosan Group and sudden capital increases by Korea Zinc that harmed minority shareholders, also played a role.
The KOSPI index fell by 9.43% last year, and the KOSDAQ index dropped 23.15%. During the same period, the U.S. S&P 500 index rose by 26.58%, the NASDAQ index by 33.37%, the Japanese Nikkei 225 by 20.37%, and the Chinese Shanghai Composite and Hong Kong Hang Seng indices saw increases of 14.26% and 17.82%, respectively.
As overseas stock trading grew, securities firms also experienced changes in their fee structures. The foreign exchange fee revenue for the nine securities firms last year was 269.66 billion won, nearly doubling from the previous year’s 129.42 billion won.
Overseas stock custody fees also increased, with the revenue for the first three quarters of last year reaching 810.9 billion won, up 33.8% from the previous year’s total of 606.1 billion won. In contrast, domestic stock custody fee revenue for the same period was 1.82 trillion won, which is 76.2% of the previous year’s total (2.38 trillion won).
Rep. Kim said, “Despite the government’s efforts to revitalize the domestic stock market with its value-up policies, failure to gain investors’ trust has accelerated capital outflow to foreign markets.” She added, “Rather than just focusing on boosting stock prices, we now need fundamental reforms to improve the capital market’s structure.”
Kim also emphasized the need for comprehensive measures to improve corporate governance, protect investors, and create a market environment that aligns with global standards.
