"Interest Rates in the 3% Era, Set to Rise Further... What Happens to My Stocks?" [World of Retail Investors]

Input: 2026-08-30 06:00:00

Updated: 2026-08-30 06:00:00

Major stock indices are displayed on an electronic board in the dealing room of Hana Bank in Jung District, Seoul, on the morning of the 28th.

/Photo=Newsis News Agency [Financial News] "I keep hearing that interest rates will keep rising, and I’m worried about what I should do with my stocks. " A 36-year-old office worker identified as A, who only recently started investing, said he has developed a habit of checking his stock app on his smartphone whenever he sees news about rate hikes these days. Like his friends, he jumped in earlier this year on hopes of a semiconductor rally, but he is now sitting on a small loss.

He said it is hard to tell how higher rates will affect his portfolio. 0%. It was the second straight increase, following July’s move.It was the first time the BOK had raised rates in consecutive meetings since April 2022, when it delivered seven straight hikes through January 2023. The stock market reacted immediately to the rate hike. With the benchmark rate raised for a second consecutive month, the KOSPI, which had been close to reclaiming the 7,000 level, lost momentum.37. 88. 09% from the previous session.

Why rates have risen for two straight months There are three main reasons the Bank of Korea raised the benchmark rate for a second straight month. The first is surging inflation.

8% in July, above the BOK’s 2% target, largely due to soaring energy costs. The second is a solid economy.

Strong semiconductor exports, improved trade conditions and a recovery in domestic demand have helped the economy grow more strongly than expected, reducing the need to keep rates low for stimulus. The third is rising household debt.

8 trillion won at the end of the second quarter of 2026, topping 2,000 trillion won for the first time. When announcing the benchmark rate hike, BOK Governor Hyun Song Shin said, "There is an expression that says it is better to fix a problem with a hoe than with a shovel.

If you respond too late, the cost is higher. " He added, "This time, we decided to act with a hoe.

" His remarks meant the central bank would act preemptively before inflation spreads further, in order to anchor inflation expectations and reduce the growth costs of a delayed rate hike. 75%.

75%. Domestic brokerages also see a high chance of further hikes.

50%. 25%, and that any further tightening next year will likely depend on the 2028 growth forecast released then.

BOK Governor Hyun Song Shin strikes the gavel during a Monetary Policy Board meeting at the Bank of Korea in Jung District, Seoul, on the morning of the 27th. /Photo=News1 How will higher rates affect stocks? In general, rate hikes are seen as negative for stocks.

As companies’ interest expenses rise, net profits fall, which can put downward pressure on share prices. Higher rates also lift returns on deposits and bonds, which can draw some money away from stocks.

Slower consumption is another negative factor. That is where A’s concerns began.

If additional benchmark rate hikes become reality, tighter liquidity could increase downward pressure on the domestic stock market. Brokerages say that if higher benchmark rates lead to higher long-term rates, they could also weaken expectations for market valuations and corporate earnings.

Heo Jae-hwan, a researcher at Eugene Investment & Securities, said, "The market’s main concern these days is interest rates, and long-term yields in major developed economies, excluding China, are unstable. " He explained, "What stands out in the recent rise in rates is not inflation, but the term premium, meaning the risk of holding bonds for a long time is increasing.

" Heo added, "A higher term premium, or greater long-term holding risk, is negative for the price-to-earnings ratio in the stock market. " He advised that even if rates do not seriously affect the real economy, investors should lower expectations for long-term earnings growth.

Hwang Soo-wook, a researcher at MERITZ SECURITIES CO. , LTD.

, also noted, "The market variable has shifted from fundamentals to macro factors. The No.

1 variable now is interest rates, especially the sharp rise in long-term yields. " He forecast that "it will be difficult to expect valuation expansion in global risk assets until long-term yields stabilize.

" "It will rise further from the 9% range" — warning to leveraged retail investors With the benchmark rate increase expected to push up margin loan rates and securities-backed loan rates, which are already in the 9% range, the burden on individual investors who borrowed to invest is set to grow further. 5%.

In general, the longer the loan term, the higher the interest rate, and many domestic brokerages are applying rates in the 9% range for long-term loans. Margin loan rates are calculated by adding a brokerage’s own spread to the benchmark rate, which is the funding cost.

Because they largely follow market indicators such as commercial paper (CP) and Negotiable Certificate of Deposit (NCD) rates, a rise in the benchmark rate inevitably pushes margin loan rates higher. 15% per year.

If the BOK’s rate hike pushes up market funding costs, brokerage financing costs will also rise, creating additional upward pressure. The problem is that the scale of leveraged investing remains large.

8654 trillion won. Although the amount has fallen from the end of June, when stock investing was especially hot, it remains high.

That is why there are concerns that the benchmark rate hike could weigh on liquidity in the stock market. 2 billion won.However, the actual increase in interest expenses may vary depending on each brokerage’s rate structure, loan term and the investor’s credit rating. I do not want to become someone who keeps saying, "I should have bought, I should have sold, I should have held." Stocks, real estate and personal finance all seem to be going well for everyone except me. The world of investing is hard no matter how much you study, but if you want to receive [World of Retail Investors] comfortably, please subscribe to the reporter page.We are also looking for tips from retail investors who have an investment story they would like to share.

[email protected] Kim Hee-sun Reporter

· This article has been translated by GripLabs Mingo AI.

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