Asia Economics Analyst Korea – Tracking Corporate Cash and Financial market Flows

Economics Research 20 September 2026 | 3:08PM KST

Korea – Tracking Corporate Cash and Financial-market Flows

n Korea has experienced substantial corporate cash generation alongside Irene Choi | exceptional equity-market volatility, driving significant shifts in financial flows Goldman Sachs (Asia) L.L.C., Seoul Branch

throughout 2026. First, Korean semiconductor companies are projected to Goohoon Kwon, CFA | generate roughly KRW150trn (or 4.9% of GDP) in net cash in 2026 and 9.3% of Goldman Sachs (Asia) L.L.C. GDP in 2027. While these net cash-flow estimates do not automatically equate to Andrew Tilton inflows into Korea’s domestic financial system, repatriation of foreign-affiliate | earnings has historically averaged at around 60%. Thus far in 2026, robust Goldman Sachs (Asia) L.L.C.

corporate inflows into MMFs have directly supported demand for money-market instruments, while overall bank funding conditions have faced offsetting pressures due to a significant slowdown in household bank deposit growth. n Second, large equity-market fluctuations have impacted other non-bank household financial flows. Increases in brokerage cash balances and equity-fund assets have coincided with higher insurance policy surrenders and elevated policy-loan demand. This has created competing cash needs for insurers, constraining their capacity to add bond holdings on the margin. n Third, household leverage linked to equity investments remains elevated despite some reduction from its peak, with the expansion in leverage accompanied by increased short-term funding by securities companies. Concurrently, leveraged investment products have strengthened the channel through which rebalancing and hedging flows could amplify equity-market price movements. n Looking ahead to 2027, the semiconductor upcycle is expected to generate an even larger pool of corporate cash, although the extent of repatriation will remain a critical determinant of domestic financial market dynamics. Wage and dividend payments by major semiconductor producers could reach 5.2% of GDP in 2027, marking the highest level in available historical data, and modification in patterns for household financial asset distribution (which shifted almost entirely towards equities in 2026) will have major implications for bank funding, money markets, and equity flows. Additionally, the demand-supply backdrop for KTBs could become more supportive in 2027, helped by lower KTB supply, potential NPS rebalancing and a recovery in WGBI-related inflows.

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Goldman Sachs Asia Economics Analyst

Background Korea has experienced substantial corporate cash generation alongside exceptional equity-market volatility, driving significant shifts in financial flows throughout 2026. The ongoing semiconductor boom is generating unprecedented cash flows for Korean corporates. However, the extent to which offshore earnings are repatriated remains a critical determinant of domestic liquidity. Concurrently, sharp equity price fluctuations have coincided with major shifts in household financial balances and leverage demand. Against this backdrop, this report examines the evolution of financial flows across Korea’s primary financial intermediaries and analyzes their implications for domestic financial markets.

1. Semiconductor cash generation The semiconductor upcycle is driving an exceptionally large increase in cash flow for Korea’s major semiconductor producers. Based on estimates from our technology analysts, major Korean semiconductor companies are projected to generate approximately KRW 150 trn in net cash flow in 2026—equivalent to nearly 5% of GDP— with a further substantial increase to over KRW 300 trn projected for 2027 (Exhibit 1). The scale of this cash generation is particularly remarkable given the substantial cash outlays involved: capital expenditures, investments, and financing activities (including dividends) are expected to total approximately KRW 270 trn (8.5% of GDP) in 2026, alongside wage and tax payments of KRW…