[사설]’Stock market overheating’ warning message, it’s not something to be overlooked

Amid growing concerns over the stock market, which is continuing a steep rise, the Bank of Korea governor Lee Ju-yeol issued a warning message of’overheating’. Governor Lee said at a recent press conference, “It is true that the rate of stock price rise is very fast compared to the past. The concern is that if you go too fast, you can shake even a small shock.” He, the chief monetary policy officer, revealed the side effects of the short-term surge in stock prices and the stock craze of individual investors.

There may be refutations of Mr. Lee’s concerns, but based on several indicators, it is difficult to see that our stock market has no signs of overheating. Individual investors made large-scale purchases from the 4th, the first trading day of the new year, and recorded a record net purchase of over 14 trillion won by the 15th. This is different from the net selling of KRW 4528 billion and KRW 13,597.8 billion by foreigners and institutions, respectively. As individual investors”debt investment’ (investment in debt) risk increases, there are also securities companies that have stopped credit loans. Securities companies’ credit loans increased by 10 trillion won last year and their balances soared to 19,221.4 billion won, followed by a surge of over 1.7 trillion won over the past 10 days from the 4th to the 13th. This is due to the rapid spread of the trend of not paying debts, as the expectations of the stock price rise and the betting sentiment of’Let’s see an accident’ fell in line.

It is desirable that the stock market, a key channel for corporate financing, is booming. However, the problem is harmony and balance with the real economy. There is bound to be a limit to the stock price increase without the virtuous cycle of the real economy. In a situation where there are not many negatives to the basic stamina of the Korean economy, such as the unemployment crisis, sluggish domestic demand, and an explosion in household debt, the stock market could be in great confusion if an unexpected shock strikes.

Last year, the number of newly opened accounts at six major securities companies was 72.3 million, nearly three times that of 2019 (2.6 million). Since mid-March last year, the stock price of our stock market has risen by 101.1%, far ahead of the US (64.7%) and Japan (73.4%). Financial authorities must prepare various countermeasures so that the stock market can maximize its natural function. Investors should also keep an eye on the stock market and not lose their cold judgment. This is because the investment result is yours to the last.