Gradually Increasing Debt Investment... Approaching 20 Trillion Won Again

Debt Investment Scale Reaches 19.5 Trillion Won on 23rd
Increased by Over 2 Trillion Won from 17.5 Trillion Won in July

Rising Debt Investment Amid Stock Market Rebound Expectations
Volatility After US Jackson Hole Meeting... Caution on Forced Liquidations

[Asia Economy Reporter Ji Yeon-jin] The balance of margin loans, where individual investors borrow money to buy stocks, has surged again to nearly 20 trillion won. Since last month, as the stock market has shown a full-fledged rebound, the practice of 'debt investment' has been continuously increasing.

According to the Korea Financial Investment Association on the 25th, as of the 23rd, the balance of margin loans was recorded at 19.5313 trillion won. Although this is about 3.6 billion won less than the previous day, it has increased by more than 900 billion won compared to 18.6299 trillion won at the beginning of this month.

The balance of margin loans had soared past 25 trillion won in September last year during the stock investment boom, but as the market weakened afterward, it dropped to the 23 trillion won level at the beginning of this year and continued to decline. On the 7th of last month, it had decreased to 17.4945 trillion won.

However, as expectations grow that the domestic stock market, which had been in a sharp decline this year, has hit bottom, the balance of margin loans has been steadily increasing. The KOSPI, which was close to 3,000 points at the beginning of the year, fell to 2,292.01 on the 6th of last month, then rebounded and recovered the 2,500 level this month.

The balance of margin loans represents the amount individuals have invested in stocks through credit transactions but have not yet repaid. When a stock price decline is expected, the balance tends to decrease as borrowed money is repaid. In particular, securities firms can sell the stocks pledged as collateral if prices fall sharply, which can further accelerate the decline. For this reason, the margin loan balance is sometimes used to gauge the stock price bottom.

The problem is that concerns about an economic recession due to Europe's energy crisis remain, and with the U.S. Jackson Hole meeting being held over three days starting today, market volatility may further increase, making the possibility of forced liquidation unavoidable. The scale of forced liquidations has steadily increased from 9.6 billion won on the 8th to 15.3 billion won on the 23rd. This is slightly higher than the monthly average forced liquidation amount of 12.4 billion won.

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