"Borrowing to Buy Stocks?" Credit Balance Also Turns to Decline Amid Index Plunge

[Asia Economy Reporter Oh Ju-yeon] As the KOSPI fell below the 1600 level, the balance of margin loans, where individual investors borrow money to buy stocks, stopped increasing and turned to a decreasing trend.

According to the Korea Financial Investment Association on the 19th, the balance of margin loans in the KOSPI and KOSDAQ markets recorded 8.5422 trillion won as of the 17th. This has been decreasing from 10.026 trillion won on the 12th, to 9.8628 trillion won on the 13th, and 9.419 trillion won on the 16th. The current margin loan balance is the lowest in six months since September 6 of last year (8.5171 trillion won).

The margin loan balance refers to the amount individual investors borrow from securities firms to purchase stocks. Generally, a higher margin loan balance indicates that more individual investors expect stock prices to rise, and even if stock prices fall, if the expectation of a rebound is strong, the balance tends to increase.

At the beginning of the COVID-19 pandemic, the margin loan balance increased due to demand to buy stocks viewing the index drop as a 'buying opportunity at a low price.' However, as the recent stock price decline has prolonged, there is analysis that the expectation of a rebound has also diminished.

Meanwhile, the KOSPI closed at 1591.20 the previous day, marking the lowest level in about 9 years and 10 months since May 26, 2010 (1582.12).

This content was produced with the assistance of AI translation services.