"I Can't Focus on Work"...Stock Market Swings Shake Office Workers' Margin Trading Accounts

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\r\n[The Financial News] Margin loan balances have topped 38 trillion won for the first time ever, adding to the burden of leveraged stock investing. While borrowing to invest has surged as the stock market has continued to hit record highs, the scale of forced selling has tripled in just one month as volatility has widened.
According to the Korea Financial Investment Association (KOFIA) on the 2nd, margin loan balances surpassed 38 trillion won for the first time on the 29th of last month. They eased slightly to 37.6812 trillion won on the 1st, but remained at a high level.
A margin loan balance refers to the amount investors still owe after buying stocks with their own money plus funds borrowed from securities firms. It is used as an indicator of individual investors' demand for leveraged investing.
As stock price swings widened amid a sharp rise in margin trading, forced selling also increased. KOFIA said the amount of forced selling last month came to 794.6 billion won. That was about three times higher than the 264.2 billion won recorded in the previous month.
Forced selling is a system in which a securities firm liquidates stocks held by an investor when borrowed money is not repaid on time or when the collateral ratio falls below the required level. If stock prices plunge, shares can be sold at prices the investor did not want, and that selling pressure can in turn weigh further on the market.
Recently, the domestic stock market has been swinging sharply as it tries to break above the 9,000 level on the KOSPI. With the index moving up and down by hundreds of points in a single day, the burden on leveraged investors is also growing.
Market volatility is also reflected in the number of sidecar triggers. The sidecar, which temporarily suspends KOSPI program trading quotes, was triggered 20 times this year. There were nine sell-side triggers and 11 buy-side triggers.
The KOSPI 200 Volatility Index, known as Korea's fear gauge, has also remained at a high level. The index rose as high as 75.42 intraday on the 2nd and stayed above 75 for three consecutive trading days.
The KOSPI 200 Volatility Index measures the market's expected volatility over the next 30 days, as reflected in KOSPI 200 options prices. It rises when more investors expect greater market turbulence. A high reading is generally interpreted as a sign of growing investor anxiety.
Another factor cited for the increased volatility is the recent full-scale trading of single-stock leveraged exchange-traded funds (ETFs) and ETNs based on Samsung Electronics and SK hynix.
Experts say leveraged investing can boost returns in a bull market, but warn that in a correction, forced selling can snowball and deepen stock price declines.
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hsg@fnnews.com Han Seung-gon Reporter