South Korean retail investors have continuously injected more funds into high-risk financial products like cryptocurrency and stocks this year on the back of strong market rallies last year and the ongoing ultralow-rate environment, data showed Sunday.

Major local lenders saw their demand deposits decline by nearly 10 trillion won ($8.95 billion) from a month earlier in January. The combined amount at Shinhan, KB Kookmin, Woori, KEB Hana and NH banks came to 637.86 trillion won as of end-January, according to the local lenders.

Demand deposits, a measure of money supply, are funds held in accounts from which deposited funds can be withdrawn at any time and without prior notice. The decrease of demand deposits means a growing number of people have fled from low-risk products provided by banks.

As investors’ preference for high-risk, high-return investment grows, the transaction volume for 24 hours at cryptocurrency exchange Upbit marked 6.02 trillion won on Tuesday, spiking from 628.3 billion won observed around three months ago, according to CoinMarketCap. Cryptocurrency exchange Bithumb’s investor deposits last month also surged 36 percent from a month earlier.

Due to their heightened attention to the stock market, the monthly average of investor deposits at brokerage houses also soared 10.8 percent on-month to 68.95 trillion won in January, according to the Korea Financial Investment Association. Outstanding deposits even surpassed 70 trillion won for three days in the month.

The nation’s benchmark Kospi bourse is where investors are mainly betting. The average daily trading volume on the Kospi has marked 25.3 trillion won so far this year, nearly double from last year’s data of 12.2 trillion won, according to the Korea Exchange. Of the total, retail investors’ average daily trading volume more than doubled to 16.5 trillion won in the cited period.

Market experts said that retail investors’ unprecedentedly massive capital movement to high-risk markets is likely to continue with their desire for profits, as near-zero interest rates are expected to remain unchanged for a while. At the same time, they warned investors to be aware of lingering market uncertainties over the virus risks.

“Whether people can obtain herd immunity (for COVID-19) by getting vaccinated becomes the key issue this year,” said Hwang Sei-woon, a research fellow at the Korea Capital Market Institute. “In the wake of the recent emergence of several virus mutations, the vaccines to be rolled out may not work in the worst scenario. In that case, we need to start the processes to cope with COVID-19 all over again.”

The main bourse’s daily market volatility expanded amid the increased capital inflows as well. This year, Kospi’s daily fluctuation rate on average came in at 2.5 percent, up from 1.7 percent, the KRX data showed. The monthly average figure recorded 2.6 percent in the previous month, which showed the highest volatility since the panic market triggered by COVID-19 in March last year. This month’s average fluctuation rate came in at 2.2 percent.

“Followed by a sharp rise (in the Kospi index) and robust demand, the market has recently fluctuated widely. It got more intensified as a large number of private investors jumped in, along with foreign and institutional investors,” said Lee Kyung-min, an analyst at Daishin Securities.

By Jie Ye-eun (yeeun@heraldcorp.com)