An employee checks SK Hynix’s stock price at Hana Infinity Seoul in Hana Bank’s main branch in Jung-gu, Seoul, on the 22nd. Reporter Oh Seung-hyun
The KOSPI surpassed the 9,100 mark to set a new record-high close, and retail investors’ margin debt also climbed to an all-time high. Although brokerages have moved to curb overheating by restricting credit-loan purchases and raising margin requirements on some stocks, the investment fervor to avoid missing the rally has shown little sign of cooling.
According to the Korea Exchange, the KOSPI closed the previous session at 9,114.55, up 62.13 points, or 0.69 percent, from the prior trading day. It marked a record-high close.
As share prices set new peaks day after day, retail investors’ outstanding margin loans also expanded rapidly. According to the Korea Financial Investment Association, outstanding margin loan balances stood at 38.4786 trillion won as of the 19th. That represented an increase of 499 billion won in a single day, surpassing the previous record of 38.0226 trillion won set on the 29th of last month.
Margin loan balances in the stock market reached 29.3977 trillion won, topping 29 trillion won for the first time. The balance in the KOSDAQ market also reached 9.0809 trillion won. After the KOSPI broke through the 9,000 level and climbed to 9,100, leverage-driven chase buying flowed in, centered on large-cap stocks, analysts said.
Margin loans refer to the amount investors borrow from brokerages to buy stocks and have not yet repaid. During rising markets, they can amplify investment returns, but conversely, when the market plunges sharply, they can lead to forced liquidations and expanded losses.
Brokerages have recently taken steps to prevent overheating in credit trading. Mirae Asset Securities and Meritz Securities raised margin requirements on some stocks on the 19th. KB Securities also temporarily restricted credit-loan buy orders starting on the 17th. Despite these measures, however, margin loan balances rose to a record high.
Brokerage account receivables, classified as ultra-short-term margin debt, stood at 1.2057 trillion won, down 24 billion won from the previous trading day. However, the amount of forced liquidations related to the receivables came to 23.4 billion won, up 9.3 billion won from 14.1 billion won the previous trading day. The ratio of forced liquidations to brokerage account receivables also rose from 1.2 percent to 1.9 percent.
Funds on the sidelines of the market also continued to flow in. Investor deposits stood at 129.3534 trillion won, approaching 130 trillion won.
With index gains, the inflow of standby funds, and the expansion of margin loans occurring simultaneously, some in the market have pointed out the need to guard against market overheating and leverage investment risks.