KOSDAQ 'margin debt' falls below the 7 trillion won mark as well... With money leaving the market, only volatility remains

[Financial News] Risk capital from individual investors is rapidly leaving the domestic stock market. The KOSDAQ margin loan balance has fallen by more than 2 trillion won in just over a month, breaking below the 7 trillion won mark, while average daily stock trading value has dropped by about 30%. Investor enthusiasm has cooled, but volatility has not eased, and on the 24th, sell-side circuit breakers were triggered again on both KOSPI and KOSDAQ.
According to the Korea Financial Investment Association, KOSDAQ margin loans stood at 6.9106 trillion won as of the 23rd, slipping below 7 trillion won. That is down 2.1703 trillion won, or 23.9%, from 9.0809 trillion won on the 19th of last month, in just over a month.
During the same period, margin loans on the Korea Exchange Main Board also fell from 29.3977 trillion won to 25.8386 trillion won. Total margin loan balances declined by 5.7295 trillion won, from 38.4787 trillion won to 32.7492 trillion won.
Trading value is also shrinking. According to Sangsangin Investment & Securities, the average daily trading value on Korea Exchange and NextTrade (NXT) combined fell about 30% to 67 trillion won so far in July, from around 100 trillion won in May and June. Meanwhile, the KOSPI 200 Volatility Index, which reflects market volatility in South Korea, remains above 80.
Researcher Shin Eol of Sangsangin Investment & Securities analyzed, "Individual investors have recently been leaving the market as they digest the sharp concentration in semiconductors and the margin call shock that followed."
A sell-side circuit breaker was triggered on the Korea Exchange Main Board at 11:23 a.m. that day, followed by another on KOSDAQ at 11:49 a.m. It was the 21st sell-side circuit breaker on the main board this year alone. Including buy-side circuit breakers, it was the 41st. KOSPI closed at 6,690.62, down 5.72% from the previous trading day, while the KOSDAQ index also plunged 5.32%.
Foreign investors sold a net 328.52 billion won on the Korea Exchange Main Board, while institutions also dumped 195.01 billion won. Individual investors, meanwhile, bought a net 517.95 billion won, absorbing most of the shares being sold.
External headwinds also piled up. As Brent Crude Oil rose above $100 per barrel amid renewed tensions between the United States and Iran, and the U.S. 10-year Treasury yield climbed above 4.70%, risk aversion spread. A sharp selloff in U.S. tech stocks such as Alphabet Inc. and Tesla also dragged Samsung Electronics and SK hynix down by more than 7% and 8%, respectively.
An official in the securities industry said, "The decline in margin balances and trading value can be seen as a sign that overheated individual funds are leaving the market." The official added, "However, even with liquidity shrinking, volatility remains elevated, so a market in which indices swing sharply on external shocks or changes in foreign investor flows may continue for some time."


[email protected] Choi Doo-seon Reporter