Strong Rally Is Seen In Growing Deposits

Signs are growing that the local equity markets are poised for steep gains, with customer deposits at securities firms surging during the most recent market rally.

"The January rally was a flash in the pan," Kim Ji-young, an analyst at Samsung Securities Co, said. "This time, customer deposits are growing little by little, and that acts positively on stock prices."

Customer deposits, a gauge for domestic investor sentiment, rose by as much as 900 billion won ($685 million) in seven trading days to 8.7 trillion won as of Wednesday, the highest level since Feb. 25. It is expected to break through this year's high of 9.1 trillion won recorded on Jan. 18.

Foreign investors have also helped boost share prices by staying in the market even when it was declining. On Thursday, they snapped up 18.8 billion won in shares on the Kosdaq market, continuing their shopping spree for a seventh-straight day. They also bought 66.5 billion won of shares on the Korea Stock Exchange, the nation's main market.

Another recent characteristic of the domestic stock market is that it no longer moves in tandem with the U.S. Nasdaq. At one point, the benchmark Korea Composite Stock Price Index gained 1.9 percent even after a 2.1-percent drop in the Nasdaq overnight.

Unlike January's ascent, the driving force of which was abundant money, corporate earnings are now being reflected in equity prices, analysts said.

Still, they said, whether the current rise is the beginning of a long-term rally is not clear because of uncertainties on the timing of a recovery and external factors.

by Chung Jeh-won