"I Want to Make Some Money Too": As KOSPI Rallies, Retail Investors' Margin Debt Hits an All-Time High

[Financial News] As the KOSPI (Korea Composite Stock Price Index) closed at a new all-time high, the balance of margin loans held by individual investors also swelled to a record level. Securities firms have introduced measures such as restricting margin purchases and raising margin requirements, but demand for leveraged investing continues.
According to the Korea Exchange (KRX) on the 23rd, KOSPI closed at 9,114.55 the previous day. That was up 62.13 points, or 0.69%, from the prior trading day and marked the highest closing level on record.
As the stock market rally continued, the amount of money borrowed by individual investors to buy stocks also increased. Data from the Korea Financial Investment Association showed that as of the 19th, the balance of margin loans stood at 38.4786 trillion won. It rose by 499 billion won in a single day, surpassing the previous record of 38.0226 trillion won set on the 29th of last month.
Margin loans in the Korea Exchange Main Board reached 29.3977 trillion won, topping 29 trillion won for the first time. The balance in the KOSDAQ market also came to 9.0809 trillion won. With KOSPI moving above the 9,000 level and then climbing to above 9,100, the market appears to have seen follow-on buying using leverage, led by large-cap stocks.
Margin loans refer to the unpaid balance after an investor borrows money from a securities firm to buy stocks. In a rising market, they can help boost returns, but if the market falls sharply, the risk of forced selling and larger losses increases.
Securities firms also moved to curb overheated margin trading. Mirae Asset Securities and Meritz Securities raised the margin requirement ratio for certain stocks on the 19th. KB Securities temporarily restricted margin loan buy orders starting on the 17th. Even so, the balance of margin loans still climbed to an all-time high.
Outstanding settlement funds, which reflect very short-term leveraged trading, fell by 24 billion won from the previous trading day to 1.2057 trillion won. Meanwhile, the value of forced selling tied to those unsettled payments came to 23.4 billion won, up 9.3 billion won from 14.1 billion won the previous day. The ratio of forced selling to outstanding settlement funds also rose from 1.2% to 1.9%.
Waiting funds for the stock market also continued to flow in. Investor deposits were tallied at 129.3534 trillion won, approaching the 130 trillion won mark.

Meanwhile, market watchers say investors should be cautious about overheating and the risks of leveraged investing, as index gains, inflows of waiting funds, and expanding margin loans are all appearing at once.


hsg@fnnews.com Han Seung-gon Reporter