Despite the sluggish stock market, Korea’s individual investors showed a stronger appetite for risky investment vehicles, raising worries over the side effects.

According to data by the Korea Exchange, individual investors accounted for 37.2 percent of KOSPI 200 stock futures trades in terms of value in the fourth quarter of last year.

The figure marks a 10-percentage point increase from 27.2 percent a year earlier.

The proportion of individual investors in the highly risky futures trade began to top 30 percent from the second quarter last year.

Forex margin trades, which need only a small amount of money in reserve, also swelled at a rapid pace, with the majority of orders placed by individual investors who want to hit it big fast.

The average monthly amount of forex margin trades reached $62.8 billion in the third quarter last year, up from $50.5 billion in the first quarter. Back in the first quarter of 2010, the amount was $29.1 billion.

On the tech-packed KOSDAQ market, the stock turnover ratio based on market capitalization stood at 184.15 in the October-December period last year, up from 118.45 in the same period of 2010.

Analysts said the sharp increase of highly speculative trades in the financial markets reflects the dearth of enticing investment channels at a time when the gloomy outlook for the Korean economy and the eurozone debt crisis continue to dampen investment sentiment.

The Bank of Korea data showed the country’s short-term funds are estimated at 627.3 trillion won as of end of October, accounting for 41.5 percent of the total capital circulating in the financial market.

By Yang Sung-jin (insight@heraldcorp.com)