"What if Samsung and SK hynix collapse?" ... KOSPI margin debt swallows 40% [Why are stocks moving?]

[Financial News] While cash waiting on the sidelines in the stock market is shrinking, more investors are borrowing to buy shares. In particular, 40% of the increase in margin loans on the main board was concentrated in Samsung Electronics and SK hynix. As semiconductor heavyweights continue to drive gains in the domestic market, the rush into these two stocks with borrowed money is fueling concerns that any price correction could amplify volatility across the market.■ Nearly half of KOSPI's increase in margin debt went to Samsung and SK hynixAccording to the Korea Financial Investment Association on the 28th, outstanding margin loans in the domestic stock market stood at 33.1024 trillion won as of the 26th, up 4.1674 trillion won, or 14.4%, from 28.935 trillion won on the last day of the previous month.
By market, the main board saw the sharpest increase. Over the same period, KOSPI margin loans rose from 22.8406 trillion won to 26.2469 trillion won, an increase of 3.4063 trillion won. KOSDAQ margin loans climbed from 6.0944 trillion won to 6.8554 trillion won, up 761 billion won. KOSPI accounted for 81.7% of the total increase in margin loans.
By stock, margin borrowing was concentrated in Samsung Electronics and SK hynix. Samsung Electronics' margin balance rose from 4.4645 trillion won on the last day of the previous month to 5.6015 trillion won on the 26th, an increase of 1.137 trillion won. SK hynix added 221.5 billion won over the same period, rising from 4.5214 trillion won to 4.743 trillion won.
The combined increase in margin balances for the two stocks reached 1.3586 trillion won, accounting for 39.9% of the total increase in KOSPI. In other words, among the hundreds of stocks listed on the main board, Samsung Electronics and SK hynix alone accounted for roughly 4 won out of every 10 won in new margin demand.
Analysts say this concentration deserves close attention, especially because the recent rise in KOSPI has depended heavily on semiconductors.
Na Jeong-hwan, a researcher at NH Investment & Securities, said, "The rebound was broad in scope, but the index's rise was effectively the result of a single sector: semiconductors." He added, "In terms of returns, most sectors posted gains, but when measured by market capitalization contribution, semiconductors explained most of the index's advance, while the contribution from other sectors was minimal."
A securities industry official said, "Whether investors made large profits or suffered losses through margin trading, some find it hard to step away from leveraged investing." The official added, "No matter how good Samsung Electronics and SK hynix may be, excessive concentration of market funds in a few stocks is not healthy, even from the standpoint of attracting investment to other companies or supporting shareholder value."■ Margin debt rises by 4 trillion won as deposits fall by 5 trillion wonMarket-side funds moved in the opposite direction from margin loans. Investor deposits, which stood at 104.1354 trillion won at the end of last month, fell to 98.9177 trillion won on the 26th, a drop of 5.2178 trillion won. Over the same period, margin loans increased by 4.1674 trillion won. In other words, while idle cash in the market declined, investing with borrowed money expanded.
The pace of margin growth also accelerated this month. Outstanding margin loans rose from 27.4439 trillion won on the 3rd to 33.1024 trillion won on the 26th, an increase of 5.6585 trillion won.
Samsung Electronics saw its margin balance rise even after its share price plunged. On the 21st, Samsung Electronics traded at 270,000 won, but by the 24th it had fallen 5.2% to 256,000 won. Even so, the margin balance increased from 5.1219 trillion won on the 24th to 5.6015 trillion won on the 26th, up 479.6 billion won in just two days. The move suggests that margin demand flowed in as investors viewed the correction as a buying opportunity.■ If semiconductors crack, margin debt could become a boomerangMargin trading can boost returns on equity when stock prices rise, but it also magnifies losses when prices fall. If a decline pushes collateral value below the maintenance ratio set by the brokerage, investors must post additional collateral. If they fail to do so, forced selling can follow.
The impact may not be limited to individual stocks, especially because Samsung Electronics and SK hynix account for a large share of KOSPI's market capitalization. If a sharp drop leaves investors short of collateral, they may sell other holdings to raise cash. That could spread selling pressure from semiconductors to the broader market.
A securities industry source said, "It is natural for money to flow into leading stocks during a rally, but concentrating not only cash but also margin debt on one side is a different matter." The source added, "With so much margin piled into Samsung Electronics and SK hynix, a major downturn in semiconductors could force investors to liquidate other holdings to cover collateral shortfalls."


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