The KOSPI index, which had fallen to the 2,290 level due to a tariff shock from the U.S., recovered to the 2,580 level this month, but the amount of forced sales related to margin trading has increased. It is interpreted that investors who clustered around highly volatile political theme stocks during the early presidential election phase suffered losses amid the sharp fluctuations in stock prices.
According to the Korea Financial Investment Association on the 8th, the amount of forced sales from margin trading on stocks recorded 8.8 billion won on the 2nd of this month. The ratio of forced sales to margin trading debt is 1.0%. After reaching an all-time low of 0.2% on the 16th of last month, it increased fivefold in just 11 trading days. During the same period, the amount of forced sales surged from 1.592 billion won to 4.5 times that amount.
Recently, market sentiment is positive. On the 9th of last month, the KOSPI index plummeted to 2,293.7 due to the implementation of reciprocal tariffs by the U.S., but it has since recovered to the 2,580 level, rising more than 12% in a month. The actual amount of forced sales against margin trading debt reached 16.6 billion won (as of April 9), indicating that investors using borrowed funds to invest suffered significant losses.
Afterwards, the scale of forced sales decreased to the range of 1.5 billion to 4 billion won, but began to increase again, surpassing 5 billion won from the end of last month.
Unlike credit transactions, which are a form of loans, forced sales in margin trading have a short-term deferred payment concept. Since the debt must be repaid within two trading days after settlement, if investors fail to provide funds by the settlement date, they are immediately forced to liquidate. If an investor buys stocks in anticipation of a short-term price surge while lacking funds, and the stock price falls contrary to their expectations, they are unable to provide funds by the settlement date, leading to forced sales.
This phenomenon is interpreted as investors flocking to political theme stocks recently. An official from the Korea Financial Investment Association noted, "It seems that the amount of forced sales surged the next day (the 2nd) as a result of the Supreme Court's ruling that reversed the guilty verdict on the election law case involving Lee Jae-myung, a presidential candidate from the Democratic Party of Korea, on the 1st. The trend of increasing the proportion of forced sales amount due to the recent drop in political theme stocks is also evident."
In fact, among domestic stocks with high turnover rates over the past five trading days, all were political theme stocks except for newly listed shares. Stock turnover rate is the value obtained by dividing trading volume by the total number of listed shares. A higher turnover rate indicates that transactions for that corporation are actively occurring. The previous day, Formetal, classified as a 'Han Duck-soo theme stock,' recorded the highest turnover rate at 165.18%. In the past five trading days, Orient Precision Industries, associated with Lee Jae-myung's political theme, was ranked fifth in net buying in the KOSDAQ with an amount of 14.2 billion won.
The total amount of credit transactions also had declined to the 16 trillion won range by mid-last month, but surged back over 17 trillion won after the 18th of the same month, indicating that the fever for borrowing to invest has not cooled down. An official from the financial investment industry stated, "Political theme stocks repeatedly rise and fall based on expectations and rumors, so aggressive and reckless buying in situations like this—when election issues are highlighted—should be avoided, and it's necessary to focus on stocks based on actual performance rather than themes."