Large-volume trading on local bourse falls in October

Retail investors' large-volume transactions on the Korean stock market plunged in October from the start of the year as they took a wait-and-see stance amid the global economic slowdown, data showed Monday.

According to the main bourse operator Korea Exchange (KRX), the number of retail investors' large-volume trading, or transactions worth 100 million won (US$92,233) and above, reached 18,243 in October, down 43.6 percent from 32,335 tallied in January.

Market watchers said the decrease came as retail investors offloaded local shares in a bid to secure safer assets such as cash amid the prolonged eurozone fiscal crisis as well as the economic slowdown in the U.S. and China.

"Investors took a wait-and-see stance on local shares and bonds in October due to weaker-than-expected effects of the third round of quantitative easing (QE3) by the U.S.," said Cho Won-hee, an analyst at KDB Daewoo Securities Co.

The Federal Reserve pledged in September to pump $40 billion every month into the U.S. economy by buying mortgage-backed securities in QE3, which earlier came as a positive factor to the stagnant global economy.

Meanwhile, the portion of retail investors on the local stock market reached 48.9 percent in October, down 6.4 percentage points from a month earlier, the KRX data showed.

The average monthly trading volume of retail investors on the local stock market also fell 25.7 percent to 90.4 trillion won in October from 121.6 trillion won tallied over the January-March period, the data added.

South Korea's M2, a narrow measure of the money supply, on the other hand, rose 5.2 percent on-year to 1,819 trillion won in September, according to the central bank, apparently due to increased cash holdings by investors.

The M2 covers currency in circulation and all types of deposits with a maturity of less than two years at lenders and non-banking financial institutions, excluding those held by insurers and brokerage houses. (Yonhap)