Stock market boom pushes margin investing above 32 trillion won for first time

[The Financial News] As the domestic stock market continues its upward trend, the scale of debt-fueled stock investing, known locally as "bit-too," has surpassed 32 trillion won for the first time on record.
According to the Korea Financial Investment Association (KOFIA) on the 28th, outstanding margin loans at securities firms stood at 32.3684 trillion won as of the 26th.
Outstanding margin loans represent the amount investors have borrowed from securities firms to buy stocks and have yet to repay. It is widely viewed as a key indicator of debt-fueled investing.
This balance first exceeded 30 trillion won on the 29th of last month, and has since increased by more than 2 trillion won in just one month.
In particular, the growth rate of leveraged investing in the Korea Exchange Securities Market (KOSPI market) has far outpaced that of the KOSDAQ market. Margin balances in the KOSPI market rose about 25%, from 17.126 trillion won at the end of last year to 21.4867 trillion won, while over the same period the KOSDAQ market increased about 7%, from 10.1603 trillion won to 10.8716 trillion won.
The sharp increase in balances is seen as being driven by the KOSPI surpassing the 6,000-point level for the first time in history this year.
Investor deposits, which represent cash on the sidelines waiting to enter the stock market, reached 119 trillion won as of the 26th and are on the verge of breaking the 120 trillion won mark for the first time. Investor deposits first exceeded 100 trillion won on the 27th of last month.
However, some in the industry warn that excessive debt-fueled investing could be dangerous. While margin loans can be used as leverage to seek higher returns, the stocks purchased serve as collateral, so a drop in share prices can trigger forced liquidation (margin calls), potentially leading to significant losses.
kjh0109@fnnews.com Jun-ho Kwon Reporter