The benchmark KOSPI index in South Korea fell as previously high-flying semiconductor stocks pulled back. On Monday, the KOSPI index closed 5.1% lower, finishing at 6,257.45 points.
During the trading session, the index dropped more than 5% at one point, with a sharp decline in chipmaker shares overshadowing support from stronger-than-expected export data. The index experienced significant volatility in July, and despite a substantial 18% rally on the previous Friday, it still posted a monthly loss of 22.2% for July — its steepest single-month decline since October 2008.
On the geopolitical front, U.S. President Donald Trump stated that he would postpone a new round of strikes against Iran, aiming to quickly reach a deal to prevent Iran from developing its nuclear program and to reopen the Strait of Hormuz.
Data released over the weekend showed that South Korea's exports in July surged 62.8% year-on-year, exceeding market expectations. Imports for July rose 26.5% to $68.56 billion, broadly in line with economists' forecasts of a 26.6% increase.
According to South Korean media reports, as the KOSPI index has fluctuated wildly since July, investor deposits, which serve as a pool of standby funds for the stock market, are also rapidly declining. Last month, the average daily deposit amount plunged by nearly 20 trillion Korean won compared to the previous month. This level is about 10 trillion Korean won less than in March of this year, when the KOSPI underwent a correction following a military conflict between the U.S. and Iran.
Data published on the 3rd by the Korea Financial Investment Association shows that as of the 30th of last month, the day the KOSPI index hit a short-term low, investor deposits stood at 104.6584 trillion Korean won. Compared to the all-time high of 139.6948 trillion Korean won recorded on June 4th, the amount has decreased by over 35 trillion Korean won in just about two months.
Investor deposits refer to funds that investors place in securities company accounts to purchase stocks. The larger this pool of funds, the higher the likelihood of increased market liquidity. When deposits shrink, the supply and demand dynamics of the market inevitably weaken.