The Intensifying 'Bittu'... Credit Extension Balance Hits Record High Streak

Outstanding Credit Balance of 23.7891 Trillion Won on the 25th
Record High Surpassed on the 8th
Continuous Increase Since Surpassing 20 Trillion Won at the Beginning of the Year

[Asia Economy Reporter Ji Yeon-jin] Since the beginning of this month, the balance of credit loans has been breaking record highs day by day. Credit loans refer to individual investors borrowing money from securities firms, and as the KOSPI surpassed 3300, indicating a bullish market, the enthusiasm for buying stocks on margin, known as ‘debt investment,’ has intensified.

According to the Korea Financial Investment Association on the 29th, the balance of credit loans reached a record high of 23.7891 trillion won on the 25th. The balance of credit loans has shown a continuous upward trend since it first exceeded 20 trillion won on January 7th this year. It surpassed 21 trillion won on January 29th, broke through 22 trillion won on March 25th, and has remained above 23 trillion won since the end of April. The increase accelerated this month, reaching a record high of 23.7472 trillion won on the 8th, and then breaking that record again on the 25th.

As the KOSPI closed above 3300 on the 25th, expectations for a rising market appear to have fueled the ‘debt investment’ trend. Since the KOSPI first surpassed 3000 at the beginning of the year, it has drawn an upward curve despite several short-term corrections. Despite concerns over a peak due to interest rate hikes and tapering issues caused by inflation, investors have bet that the bullish market will continue. Some even predict the KOSPI could soar to 3400.

However, recent index gains have been driven by rapid rotation without leading stocks, making it a period where ordinary investors find it difficult to make profits, raising caution. For example, Samsung Electronics, the most favored stock among individual investors, recorded a year-to-date return of only 1.1% as of the previous day’s closing price, and LG Chem showed 1.21%. During the same period, Kakao rose 98.6%, Naver increased 39.49%, while Celltrion fell 25.9%.

In particular, the increase in the balance of credit loans is more concerning because losses from forced liquidation during a downturn can grow. Forced liquidation occurs when an investor fails to repay the loan by maturity or when the collateral value falls below a certain ratio, prompting the securities firm to forcibly sell stocks to recover the loan.

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