South Korean Investors Direct Most Stock Gains to Real Estate, BOK Report Says

The Bank of Korea on Thursday reported that investors are directing gains from stock investments primarily into the local property market rather than consumption. According to the central bank's findings, South Korean investors spent about 130 won, or US$0.08, on consumption for every 10,000 won earned through stock investments. That equals 1.3 percent of their capital gains.

The figure stands in contrast to investors in other advanced nations, who direct 3 to 4 percent of stock investment gains toward consumption. The report was released one day after the benchmark KOSPI index rose above the 7,300 mark for the first time, driven by gains in technology stocks.

The central bank said South Korean investors continue to favor real estate even after the recent stock market rally.

For households that own no homes, about 70 percent of capital gains from stock investments were moved into the property market. The Bank of Korea recommended that authorities establish an investment environment that can turn the stock market into a solid foundation for household asset formation.