KOSPI Sees 'Rollercoaster' Ride for 4th Straight Day; Warning Lights Flash Over Surge in Forced Liquidations

[Anchor]

The KOSPI plunged more than 4% today (June 10), continuing its rollercoaster ride for several days. As market volatility intensifies, forced liquidations due to insufficient collateral are on the rise, while at the same time, more investors are taking on debt to buy stocks.

Reporter Kim Hye-min has the story.

[Reporter]

The KOSPI started the day on a weak note and saw its losses widen sharply in the afternoon.

At one point, the index tumbled 6.8% to 7,541, triggering a sell-side circuit breaker, which halts program trading orders for five minutes.

This marks the fourth consecutive trading day of circuit breakers, following sell-side triggers last Friday and Monday, a buy-side trigger yesterday, and another sell-side trigger today.

It is the 24th time this year, a frequency already comparable to the 2008 global financial crisis.

The KOSPI closed at 7,730, down 4.5%.

Various factors have been cited, including renewed tensions in the Middle East following the downing of a U.S. helicopter and concerns that U.S. consumer price data, set to be released tonight, could come in higher than expected.

Amid the volatile investor sentiment, large-scale ETF trading is driving the direction and intensity of the market.

[Interview: Lee Kyung-min, Researcher at Daishin Securities: "On June 8, financial investment firms sold 2.5 trillion won, yesterday they bought 2.1 trillion won, and today they sold 1.8 trillion won... Since most of this is ETF trading, it tends to be directional, which dictates the market's path."]

Despite the repeated sharp fluctuations, many individuals are still engaging in risky investments.

Forced liquidations, where brokerage firms automatically sell off stocks because investors who bought on margin lack sufficient collateral due to price drops, have exceeded 470 billion won over the past three trading days.

The balance of personal line-of-credit accounts at the five major commercial banks stands at 42.9 trillion won, the highest level in three years and seven months since late November 2022.

This figure increased by 608.5 billion won on the 5th and 8th, when the market saw significant drops.

[Interview: Seo Ji-yong, Professor of Business Administration at Sangmyung University: "In a falling market, fear intensifies, making it easy to repeatedly cut losses or face liquidation at the bottom. Investors tend to fall into a pattern of buying on leverage at market highs and selling at market lows..."]

Experts advise that with unprecedented volatility continuing, it is a time to be more cautious than ever when it comes to trading.

(Reported by Choi Ho-jun and Kim Heung-ki | Video by Choi Jin-hwa | Graphics by Park Tae-young and Lee Jun-ho)
※ Please note: This article was translated by AI and may contain errors.