"Is South Korea's Stock Market Unfit for Investment?" FSC Directly Rebuts Bloomberg Statistics

[Financial News] South Korea's financial authorities pushed back against a Bloomberg column that questioned whether the Korean stock market is suitable for investment, saying that some of the cited statistics do not match the facts and that the original sources could not be verified. In a statement on the government's position on the domestic stock market on the 5th, the Financial Services Commission (FSC) said the fundamentals of the Korean economy and stock market remain solid, citing economic growth, the current account balance, and earnings forecasts for KOSPI-listed companies. It also said trading volume in single-stock leveraged products, which recently drew overheating concerns, has fallen sharply after the increase in the minimum deposit requirement.
According to the authorities, a Bloomberg column titled "South Korea Is Becoming Uninvestable, Too" raised concerns about the investability of the Korean market. In response, the FSC pointed out that some of the statistics cited in the column do not align with the facts and that the exact sources could not be confirmed.
The FSC cited forced-sale statistics as an example. The column referred to 360,000 accounts in connection with forced sales, but the FSC said the average number of forced-sale accounts in June, combining margin loans and short-term credit purchases, was about 3,000 per day.
However, the FSC's materials did not specify the period or calculation basis for the 360,000-account figure cited by the column, nor did they provide a detailed statistical source for the daily average of 3,000 accounts.
The FSC pointed to GDP growth and the current account balance as indicators supporting the fundamentals of the Korean economy. According to the FSC, real GDP in the second quarter of this year rose 3.7% from a year earlier. The current account posted a surplus of $38.61 billion in May, the largest monthly figure on record.
The commission said earnings forecasts for listed companies have also improved compared with the market's previous peak. The FSC, using estimates compiled by financial data provider FnGuide, said projected KOSPI company earnings for 2026 rose from 644 trillion won at the end of March to 854 trillion won at the end of April and 912 trillion won at the end of May.
On June 22, when the KOSPI hit its peak, the figure stood at 930 trillion won. It then rose to 975 trillion won at the end of July and 978 trillion won on Aug. 4.
The FSC said the recent increase in stock market volatility was the result of multiple factors acting together. It added that volatility has risen since mid-June, but market assessments suggest investor sentiment has recently begun to recover.
The government is also pushing ahead with follow-up measures for single-stock leveraged products. According to the FSC, trading volume in such products on Aug. 4 came to 130 billion won, down about 89.5% from 1.24 trillion won on July 30, before the minimum deposit requirement was raised.
Compared with the record 1.94 trillion won on June 25, trading volume fell by about 93.3%. The decline may also reflect a combination of factors, including market fluctuations, underlying asset prices, and changes in investment demand, in addition to the higher minimum deposit requirement. It is difficult to conclude from short-term changes in trading volume alone that volatility in the product or the broader stock market has stabilized.
The FSC said, "We will push ahead with efforts to improve the structure of the capital market to manage short-term market volatility while enhancing the stock market's resilience and growth potential."

[email protected] Kim Mi-hee Reporter