▲ An employee works at the dealing room of Hana Bank in Jung-gu, Seoul, on the 10th, as the KOSPI closed lower.
As the KOSPI experiences significant daily fluctuations, the volume of forced liquidations—where stocks held by retail investors are sold off automatically—has reached the 100 billion won range for three consecutive trading days.
According to the Korea Financial Investment Association on the 10th, the balance of short-term margin trading receivables, often referred to as "ultra-short-term debt-financed investment," stood at 1.5953 trillion won as of the 9th.
This figure is a decrease of approximately 30 billion won from the previous trading day's 1.6245 trillion won.
In these transactions, investors borrow money from brokerage firms to purchase stocks and are required to settle the payment within two trading days. If they fail to do so, the stocks are forcibly sold—a process known as forced liquidation—on the third trading day.
The value of stocks sold through forced liquidations on the 9th reached 169.6 billion won.
This surpasses the 139.1 billion won recorded on the 8th and the 166.1 billion won on the 5th, marking the highest level since October 18, 2023, when it reached 276.7 billion won.
This is the first time since October 2023 that the volume of forced liquidations has stayed in the 100 billion won range for three consecutive trading days, with the total value of forcibly sold stocks nearing 500 billion won during this period.
Over the past month or so, starting from the 1st of last month, the total volume of forced liquidations has reached 1.2571 trillion won, well exceeding the 1 trillion won mark.
Forced liquidation is estimated to cause significant losses for retail investors, as stocks are sold off at the lower limit price on the third trading day if the investor fails to repay the borrowed funds.
Although the KOSPI plummeted by 5.54% and 8.29% on the 5th and 8th, respectively, falling below the 8,000-point mark, it rebounded by 8.18% on the 9th to recover the 8,000 level. Despite this recovery, the scale of forced liquidations remained high.
The ratio of forced liquidations to margin receivables also surged to double digits, reaching 10.5%, surpassing the 9.1% recorded on the 5th and 8.2% on the 8th.
On the 9th, the balance of credit trading loans increased by approximately 140 billion won from the previous day to 37.929 trillion won, nearing the level seen on the 29th of last month, when it exceeded 38 trillion won for the first time in history.
The credit trading loan balance represents the amount of money borrowed by investors from brokerage firms for stock investments that has not yet been repaid.
This indicates that retail investors have a substantial amount of debt-financed investments.
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.