SK Hynix plunges 10% ... Retail investors hit by forced liquidations cry, “You said it would hit 3.2 million won”

[Financial News] SK Hynix and Samsung Electronics plunged around 10% in a single day on the 13th. The value of shares forcibly sold from the accounts of investors who had borrowed money to buy stocks reached its highest level in more than two months. In just one day, the share of unpaid balances owed to securities firms that was settled through forced sales more than doubled.
The concern is that the KOSPI’s losses widened further as trading opened on the 15th. Forced liquidations among retail investors who used leverage to invest with borrowed money are expected to snowball.

According to the Korea Financial Investment Association on the 14th, forced sales accounted for 5.6% of outstanding balances from brokerage transactions the previous day. That was the highest level since July 31 (7.1%) and more than double the 2.7% recorded the day before, on the 12th.
The actual value of forced sales was 59.35 billion won, the highest since the 122.01 billion won recorded on July 31.
Forced sales refer to securities firms forcibly liquidating shares in accounts that lack sufficient margin. If an investor cannot repay money borrowed from a securities firm, or the value of shares pledged as collateral falls below a set threshold, the firm sells the shares held in the account without the investor’s consent to recover the money it lent.
Forced sales surged because the sharp market decline caused collateral values to fall all at once. The KOSPI closed down 5.46% from the previous trading day. During the session, it fell as low as 5,911.11, dropping below the 6,000 mark for the first time in about two and a half months since July 31, when it hit an intraday low of 5,629.76. SK Hynix and Samsung Electronics, the two leading stocks in the domestic market, plunged 10.09% and 7.39%, respectively.
The scale of debt-fueled investing remains large. The outstanding balance of credit loans for stock trading, a key indicator of such investing, stood at 34.2529 trillion won, similar to the 34.2887 trillion won recorded on the 12th, its highest level since July 15 (34.3701 trillion won). This means the volume of forced sales could grow further if the market falls again.

Meanwhile, the KOSPI fell to the 5,600 level in just one day. According to the Korea Exchange on the 15th, the KOSPI opened at 5,673.01, down 335.8 points (5.59%) from the previous day’s close of 6,008.81. The KOSDAQ opened at 784.45, down 39.4 points (4.79%) from the previous trading day’s close of 823.88.
SK Hynix has also been plunging since early trading. As of 9:54 a.m. that day, it was trading at 1,275,000 won, down 10.15% from the previous trading day.
The decline is attributed to mounting concerns about the burden of monetary tightening to curb inflation after the U.S. consumer price index (CPI) for September came in above market expectations, as well as a deterioration in investor sentiment following an overnight plunge in technology stocks on Wall Street. There, a series of sell-offs focused on technology and semiconductor stocks followed concerns about financial health after AI cloud company CoreWeave moved to borrow heavily to expand infrastructure such as data centers.
Han Ji-young, a researcher at Kiwoom Securities, explained, “The impact of intensified selling pressure across the AI value chain in the United States was significant.” She added, “The domestic market also opened lower in the wake of a simultaneous plunge in AI infrastructure stocks. However, I expect losses to narrow as technical buying may emerge after seven consecutive sessions of sharp declines and the market digests the TSCM earnings event scheduled for later in the session.”
[email protected] Kim Hee-sun Reporter