“Borrowed to buy stocks, then forcibly liquidated” ... Forced sales tied to debt-financed investing top 89.3 billion won in a day

[The Financial News] As the KOSPI plunged, forced sales involving investors who borrowed money to buy stocks exceeded 89.3 billion won in a single day. That was about 30 billion won more than the previous day, as forced selling driven by falling share prices accelerated.
According to the Korea Financial Investment Association on the 16th, forced sales related to unpaid balances from brokerage transactions totaled 89.336 billion won on the 14th. That was the largest amount in about two and a half months, since 122.01 billion won on July 31.
The amount of forced sales rose sharply in just a few days. It was about 6.4 billion won a day on the 8th and 9th, but increased nearly fourfold to 27.1 billion won on the 12th, then climbed to 59.35 billion won on the 13th.
On the 14th, the amount reached 89.336 billion won, up 29.986 billion won from the previous day.
As the stock market has plunged further, concerns about forced selling have also grown. The KOSPI closed at 5,554.22 on the 15th, down 454.59 points (7.57%) from the previous trading day, after an intraday circuit breaker was triggered. This has prompted concerns that forced sales could increase further.
Forced sales occur when investors fail to pay for stock purchases by the deadline, or when the value of shares pledged as collateral for a loan falls below a certain level.
In such cases, brokerages can forcibly sell shares held by investors without obtaining their separate consent to recover unpaid balances or loan amounts.
Unpaid balances from brokerage transactions also topped 1.3 trillion won. As of the 14th, they stood at 1.3574 trillion won, up 115.9 billion won from 1.2415 trillion won on the 13th, the previous trading day.
Unpaid balances, which stood at 931.6 billion won on the 7th, continued to rise after surpassing 1 trillion won on the 12th.
Unpaid balances from brokerage transactions are amounts investors owe for stock purchases that they have not paid by the scheduled settlement date. Investors can buy stocks while temporarily short of funds, but if they fail to pay the full amount by the settlement date, the brokerage can forcibly sell the shares.
The outstanding balance of margin loans—money borrowed from brokerages to buy stocks and not yet repaid—stood at 33.7057 trillion won as of the 14th. This balance represents the amount investors owe brokerages for loans to purchase stocks.
By contrast, investor deposits, classified as funds waiting to enter the stock market, declined. They fell from 100.0982 trillion won on the 13th to 97.428 trillion won on the 14th, a drop of 2.6702 trillion won in a single day.
The KOSPI traded around the 6,900 level early this month, but fell for seven consecutive trading sessions from the 6th, dropping to the 5,400 level intraday on the 15th. It also came close to the low recorded during the sharp decline in July.
[email protected] Han Seung-gon Reporter