"Ultra-short-term" margin trading, which had been on a downward trend after falling below KRW 1 trillion, is on the rise again.
Forced liquidations have also surged significantly.
According to the Korea Financial Investment Association today (July 30), brokerage margin receivables were tallied at KRW 1.1999 trillion as of July 29.
While this is a decrease from the previous session (KRW 1.2237 trillion), the overall trend points upward.
Margin receivables, which are ultra-short-term debt-financed investments borrowed from securities firms for two days, fell below KRW 1 trillion for the first time since April 23, recording KRW 945.4 billion on July 23.
However, after surpassing KRW 1 trillion just a day later on July 24 (KRW 1.0321 trillion), the figure has been climbing again.
Stocks forcibly liquidated due to failure to repay these margin receivables reached KRW 61.1 billion on July 29.
This marks a massive surge, about 4.5 times the level recorded a day prior on July 28 (KRW 13.8 billion).
The ratio of forced liquidations to margin receivables also increased from 1.3% on July 28 to 5.0% on July 29.
This is interpreted as the result of retail investors failing to pay back their margin debt as the domestic stock market plunges sharply day after day.
On July 29, the KOSPI closed down sharply by 5.98%.
Furthermore, it plummeted by 10.84% on July 28.
The credit transaction financing balance, another indicator of debt-financed investing, stood at KRW 32.995 trillion on July 29, down KRW 200 billion from the previous session (KRW 33.194 trillion).
Amid the recent stock market decline, this balance has been fluctuating around the KRW 33 trillion level.
Investor deposit funds, which act as waiting capital for the stock market and had previously threatened to drop to KRW 100 trillion, were tallied at KRW 109.5925 trillion.
This represents an increase of KRW 2.3931 trillion from the previous day, marking a rebound since July 22 (KRW 103.8765 trillion).
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