According to Caixin, Ioannis Blekos, Managing Director at Goldman Sachs’ trading division, noted that as of July 13, over 1.2 million retail leveraged credit accounts in South Korea had triggered margin calls, with approximately 320,000 to 360,000 accounts forcibly liquidated by brokers. With South Korea’s population aged 15 to 64 totaling about 35.7 million, this suggests roughly one in every 30 working-age individuals received a margin call. The report also stated that the total margin balance in retail brokerage accounts has declined by approximately KRW 30 trillion, reaching its lowest level since February 20 of this year. Meanwhile, the proportion of accounts receiving margin calls rose to around 5% last Friday and is expected to increase further as selling pressure intensifies in the semiconductor sector. Data on Thursday’s fund flows indicated that both foreign and domestic institutional investors have begun withdrawing.
One in 30 working-age Koreans faced margin calls amid high leverage in the stock market.
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Summary
Margin trading in South Korea’s stock market faced a downturn as over 1.2 million retail investors with leveraged accounts received margin call notices by July 13. Brokers liquidated between 320,000 and 360,000 accounts, impacting roughly one in every 30 working-age Koreans. Margin balances fell by 30 trillion KRW, reaching their lowest level since late February. Amid pressure on semiconductor stocks, margin call rates rose to 5% last week. Meanwhile, value investing in crypto remains a safer alternative as institutional and foreign investors continue to withdraw from local equities.
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