Forced Liquidations of Retail Investors' Stocks Reach 300 Billion Won Amid KOSPI Plunge

Over the past two trading days, as the KOSPI experienced a sharp decline, retail investors saw approximately 300 billion won worth of their stocks forcibly sold through "forced liquidations" (ban-dae-mae-mae).

According to the Korea Financial Investment Association on June 9, the balance of short-term margin trading—often referred to as "debt-financed investment"—stood at 1.6245 trillion won as of June 8.

While this is a decrease of 64 billion won from the previous trading day on June 5 (1.6885 trillion won), it remains about 300 billion won higher than the level recorded on June 2 (1.3277 trillion won).

In these transactions, investors borrow money from brokerage firms to purchase stocks and must repay the funds within two trading days. If they fail to do so, the stocks are forcibly sold on the third trading day.

Consequently, the value of stocks forcibly sold on June 8 amounted to 139.1 billion won.

This marks the third-largest daily volume recorded this year.

In particular, following the forced sale of 166.1 billion won on June 5, the figure exceeded 100 billion won for two consecutive days, resulting in over 300 billion won in forced liquidations over the two-day period.

On June 5 and June 8, the KOSPI plunged by 5.54% and 8.29%, respectively, falling below the 8,000-point mark.

Although forced liquidations reached 145.8 billion won on May 20, this is the first time this year that the amount has exceeded 100 billion won for two consecutive days.

The ratio of forced liquidations to margin debt reached 8.2% on June 8, maintaining a high level following the 9.1% recorded on the previous trading day.

The previous day's figure was the highest recorded since October 24, 2023 (53.2%).

The balance of credit transaction loans stood at 37.7091 trillion won on June 8, a slight decrease from June 5 (37.8383 trillion won).

However, this balance has remained at a high level in the high 37 trillion won range for five consecutive trading days since surpassing 38 trillion won for the first time on May 29.

The balance of credit transaction loans refers to the amount that investors have borrowed from brokerage firms for stock investments and have yet to repay.
※ Please note: This article was translated by AI and may contain errors.