Korean companies account for 87% of August's M2 gain

Of the 39.1 trillion won added to M2 in August, non-financial corporations raised their money holdings by 33.9 trillion won ^[5][1], or 87% of the total ^[12], a gain 13.5 trillion won larger than the 20.4 trillion won they added in July ^[15][5]. Households and nonprofits added 0.3 trillion won ^[6]. The corporate increase was roughly 110 times the household one ^[14].

The chipmaker angle is narrower than the shorthand suggests. Seoul Economic Daily attributes semiconductor deposits only to the money-trust line ^[3], puts the time-deposit gain down to corporate surplus funds and a turnaround in household money ^[2], and ties the 12.6 trillion won in money market funds to improved corporate earnings ^[4]. The reports do not say how much of the money-trust gain came from chipmakers, so their share of the corporate total cannot be sized.

The three products together added 55.5 trillion won ^[13], well above the 39.1 trillion won total, because M1 moved the other way. It fell 1.1% to 1,357.6 trillion won ^[10]. Backing out the prior level gives a drop of roughly 15.1 trillion won ^[16], and the products less that drop come to roughly 40 trillion won ^[17], close to the headline. A good share of the product inflow therefore looks like balances moving inside M2 (our inference from the totals).

We think the cleanest description is corporate cash parked short. Firms with better earnings are holding money in products that mature in under two years ^[2][3], and for as long as it sits there it is not going into equipment or payouts. The counter-thesis is that parking is a stop on the way to spending, in which case August is timing and not a stance, and one month of data cannot separate the two. We would be wrong on the parking reading if September shows corporate holdings falling back below July's 20.4 trillion won while M2 still grows, or if the household line grows to a multiple of 0.3 trillion won.

The annual rate points the other way. M2 grew 5.6% from a year earlier, down from 5.8% ^[8], while the monthly rate tripled from 0.3% to 0.9% ^[7][18]. The monthly figure is seasonally adjusted and the annual one is not ^[11], and Yonhap notes that M2 has risen steadily since November ^[20]. One month of acceleration has not yet lifted the annual rate, which slipped 0.2 point ^[19].