In the second half of last year, the domestic stock market saw a sharp decline, resulting in large-scale forced sales of stocks by investors who engaged in "debt investment". The most affected stock was Samsung Electronics. Additionally, stocks in the secondary battery sector, such as POSCO Holdings and Ecopro, which have a high proportion of individual investors and saw significant price drops, also experienced large-scale forced sales.
According to data received from the Financial Supervisory Service through a lawmaker's office on the 6th, the forced sales volume of credit transactions for the top 10 domestic securities firms (Mirae Asset, Hana Financial Investment, KB, NH, Samsung, Meritz, Shinhan, Hana, Kiwoom, and Yuanta) based on total assets amounted to 1.4685 trillion won from January 2 to December 19 last year.
The scale of forced sales in the first half of last year was 552.1 billion won, but it nearly doubled in the second half. This is seen as a result of adverse factors such as the significant market crash in August and the declaration of martial law in early December, leading to a sharp decline in the stock market.
In credit transactions, forced sales occur when investors buy stocks with borrowed money from securities firms, and if the stock price falls below the collateral ratio, the securities firm enforces a sale to recover the loaned amount. Investors can purchase more stocks than they have with their own money through credit transactions to maximize revenue, but when forced sales occur, they often lose most of their principal, resulting in significant losses. Currently, the scale of forced sales in credit transactions is not officially disclosed.
Looking at the scale of forced sales, August of last year recorded the highest monthly figure at 260.2 billion won. During that time, the "Black Monday" incident resulted in the KOSPI index dropping by 8.8% and the KOSDAQ index falling by 11.3% on a single day, August 5.
Following the ongoing weakness in stock prices, forced sales reached approximately 113.3 billion won in September, 116.5 billion won in October, 187 billion won in November, and 92.8 billion won in December. If the unreported forced sales at the end of December are included, the total amount is expected to have increased further. The KOSPI index, which rose to 2891.35 on July 11 last year, fell to 2399.49 on the closing day of December 30, reflecting a 17% decline from its peak. The KOSDAQ declined by 26% compared to its yearly high of 916.09.
The stock that experienced the most forced sales was Samsung Electronics, with an amount of 43.3 billion won. Samsung Electronics rose to 87,800 won on July 9 last year but plummeted by 40% to 53,200 won by year-end. Other secondary battery stocks, such as POSCO Holdings (25.3 billion won, 2nd), Ecopro BM (22.3 billion won, 3rd), Ecopro (19.4 billion won, 5th), and POSCO Future M (17.2 billion won, 6th), also ranked high.
Additionally, SK Hynix (19.8 billion won, 4th), Doosan Energy Solutions (14.5 billion won, 7th), Yuhan Corporation (14.1 billion won, 8th), Celltrion (13.5 billion won, 9th), and LG Chem (12.5 billion won, 10th) made the top 10 for forced sales.
An increase in the scale of forced sales due to falling stock prices can also act as a cause for further declines in stock prices, as stocks are sold in large quantities at prices lower than the market price. There is an analysis indicating that the surge in forced sales intensified downward pressure on stock prices.
Lee Sang-ho, a research fellow at the Capital Market Research Institute, noted, "When large-scale panic selling occurs due to forced sales in a market where liquidity is not supportive, a flow that leads to further declines in stock prices emerges."
Some point out that the phenomenon of 'backwardation,' where futures prices fall below spot prices due to difficulties in short selling, has increased stock price volatility. A financial investment industry insider, who requested anonymity, commented, "During the period when short-selling was banned, the gap between futures and spot prices for certain stocks widened, which led to situations where market volatility increased if the futures prices fluctuated due to stock market declines, causing margin calls to occur in difficult selling situations."