Korean Stock Market Surpasses 4000 Points, IPO Frenzy and Concerns Over Capital Outflow from Banks Intensify

As of November 14, 2025, the Korean stock market is at a historic turning point. The KOSPI index has surpassed 4000 points, ushering in the so-called ‘4000 era’, accompanied by a large-scale influx of capital into the stock market. Particularly noteworthy is the frenzy occurring in the IPO subscription market, with newly listed companies like Curiosis (headquartered in Seoul) and Innotech (headquartered in Seoul) capturing investor interest by recording ‘double upper limits’ on their first day of listing.

However, beneath this stock market boom lies growing concern within the financial sector, particularly among commercial banks. The proportion of individual investors’ stock trading volume is rapidly increasing, accelerating the movement of bank deposits into the stock market. This capital shift suggests a structural change in the entire Korean financial market, beyond a mere change in investment trends.

Currently, the market capitalization of the Korean stock market is approximately 2800 trillion won, an increase of over 15% compared to last year. Among this, individual investors account for more than 65% of the total trading volume, the highest level since the COVID-19 pandemic in 2020. The participation of young investors in their 20s and 30s has notably increased, with the trading volume on mobile trading platforms they primarily use surging by over 40% compared to the previous year.

The IPO market is even hotter. The amount of capital poured into IPO subscriptions this year has reached about 150 trillion won, already surpassing last year’s total subscription amount of 120 trillion won. Curiosis saw a 29.8% surge on its first day of listing compared to its IPO price, and Innotech recorded consecutive upper limits on its first and second days, rising more than 60% compared to its IPO price. These performances are further fueling investors’ expectations for IPOs.

The Dilemma for Commercial Banks: Deposit Outflow and Profitability Pressure

The issue is that this stock market boom is a double-edged sword for commercial banks. The personal deposit balance of the top five domestic commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) decreased by about 3.2% in the first week of November compared to the previous month. This decline is difficult to explain by seasonal factors alone. Notably, the decrease in demand deposits, which allow for free deposits and withdrawals, is more significant than in time deposits, indicating that investors are managing their deposits in a way that allows them to seize stock investment opportunities at any time.

For KB Kookmin Bank, the balance of personal demand deposits decreased by 4.1% compared to the previous month, and Shinhan Bank saw a 3.8% reduction. Hana Bank and Woori Bank recorded decreases of 3.5% and 3.2%, respectively. This deposit outflow is leading to an increase in banks’ funding costs. In fact, the average deposit interest rate of commercial banks rose by 0.1-0.2 percentage points compared to the previous month, interpreted as a defensive measure to prevent customer attrition.

A more serious issue is that this deposit outflow is constraining banks’ lending capacity. As managing the loan-to-deposit ratio becomes challenging, some banks are restricting new loan issuance or raising loan interest rates. KB Kookmin Bank temporarily halted new mortgage loan issuance, and Shinhan Bank raised personal credit loan interest rates by 0.3 percentage points.

On the other hand, securities firms are becoming the biggest beneficiaries of this capital movement. Mirae Asset Securities saw an 8.2% increase in customer deposits in the first week of November compared to the previous month, and Kiwoom Securities also increased by 7.8%. Korea Investment & Securities and NH Investment & Securities recorded increases of 6.9% and 5.7%, respectively. This indicates not only an increase in trading volume by existing investors but also a surge in new account openings.

The Structural Background and Market Impact of the IPO Frenzy

The current IPO frenzy is analyzed as a result of multiple structural factors. Firstly, the prolonged low-interest-rate environment has led investors to seek higher returns, and the symbolic significance of the KOSPI surpassing 4000 points is further stimulating market sentiment. Additionally, many of the recently listed companies belong to high-growth sectors such as AI, biotechnology, and semiconductors, heightening investor expectations.

Curiosis operates an AI-based drug development platform and was valued at approximately 1.2 trillion won during its IPO. Its market capitalization exceeded 1.5 trillion won post-listing, entering the top 10 in the domestic biotech sector. Innotech manufactures semiconductor post-processing equipment and is expected to benefit from the recent surge in demand for AI semiconductors.

However, experts caution that a cautious approach is necessary regarding the current IPO frenzy. According to an analysis by Korea Investment & Securities Research Center, the average post-listing three-month return of companies listed this year compared to their IPO price is about 15%, higher than last year’s 8% but significantly lower than the 35% during the 2021 IPO frenzy. This suggests the market is operating relatively rationally, but concerns about overheating in some stocks are also being raised.

Mirae Asset Securities analyst Kim stated, “The current IPO market frenzy is a result of improved performance expectations and abundant liquidity,” but also warned, “Participating in subscriptions without thoroughly examining individual companies’ fundamentals can be risky.” In fact, about 30% of companies listed this year are maintaining a price below their IPO price post-listing.

In this situation, financial authorities are also expressing concerns about market stability. The Financial Supervisory Service recently requested securities firms to strengthen risk management during the IPO subscription process and announced that it is considering measures to limit excessive leverage use by individual investors. Additionally, the Bank of Korea stated in its Financial Stability Report that it is closely monitoring the impact of the rapid capital movement into the stock market on the overall stability of the financial system.

Interestingly, this phenomenon is not unique to Korea. In the United States, the Nasdaq is reaching all-time highs, activating the IPO market, and Japan is experiencing a similar trend with the Nikkei index reaching its highest point in 35 years. However, Korea’s higher proportion of individual investors compared to other countries suggests greater volatility.

Ultimately, the phenomena occurring in the Korean stock market signify a restructuring of the entire financial market ecosystem, beyond a mere change in investment trends. Commercial banks are realizing the limitations of their traditional deposit-centric business models, while securities firms are encountering new growth opportunities. For investors, more diverse investment opportunities are opening up, but they also face the need to bear higher risks.

How these trends will unfold in the future depends on various factors. Macroeconomic factors such as changes in the U.S. Federal Reserve’s monetary policy or domestic real estate market trends are expected to have significant impacts. Additionally, government capital market policies or the regulatory direction of financial authorities can influence the behavior of market participants. Personally, it is important to observe whether the current enthusiasm will lead to sustainable growth momentum or end as a temporary overheating phenomenon.

This article was written after reading a Maeil Business Newspaper article, with personal opinions and analysis added.

Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. The responsibility for investment decisions lies with the investor, and no responsibility is taken for investment losses based on the content of this article.