This August, the average daily 'reverse trading' volume was the second largest since the actual transaction amount was first recorded in November 2023. Reverse trading refers to the forced sale of stocks by securities firms when customers fail to repay funds used for margin trading or credit loans in a timely manner.
Although the KOSPI index is maintaining around the 3200 level, it is interpreted that there was a surge in reverse trading as the stock prices of major leading sectors experienced significant fluctuations.
According to the Korea Financial Investment Association on the 30th, the average daily reverse trading amount compared to margin trading balances from August 1 to 28 was 7.858 billion won. This is the highest since the beginning of this year and the second largest after the average daily 10 billion won recorded in August last year. As this figure only counts reverse trading related to margin trading, the total reverse trading volume, including credit trading, is likely to have been larger.
The reason for the high reverse trading in margin trading last August was the so-called 'Black Friday and Monday' impact. At that time, the global stock market was shaken by the fallout from the unwinding of the 'yen carry trade' (a method of borrowing yen at low interest rates to invest in countries or products with relatively higher interest rates). The KOSPI index plummeted from the 2700s to the 2300s.
This August, while there were several events including the tariff policy of the Donald Trump administration and the first tax reform plan of the Lee Jae-myung government, there was no crash. The peak of the KOSPI index was 3242.17, with a low of 3079.27, showing a 5% difference.
Nevertheless, the fluctuations in stock prices of major leading sectors such as shipbuilding, defense, nuclear power, and cosmetics have likely contributed to the large scale of reverse trading. For instance, in the case of Doosan Enerbility, which borrowed a lot of money for individual stock trading, the stock price that had been hovering around the 60,000 won level fell to 51,100 won during intraday trading on the 20th amid controversy over agreements involving Korea Electric Power Corporation, Korea Hydro & Nuclear Power, and the U.S. Westinghouse. Other nuclear stocks also plummeted. The next day, the scale of reverse trading related to margin trading exceeded 12.6 billion won.
Additionally, analyzing the magnitude of the decline from the August peak to the low of stocks with high individual trading amounts and high credit balance rates shows ▲Hanwha Ocean at 9.2% ▲NAVER at 11% ▲APR at 16.4% ▲Hyundai Rotem at 20.5%.
As domestic stock price indices continue a sluggish trend, the size of investor deposits has decreased from 71.778 trillion won on the 1st to 66.862 trillion won on the 27th of this month. There are forecasts that uncertainties may increase in September, potentially leading to a lack of direction.
Han Ji-young, a researcher at Kiwoom Securities, noted, "It has become crucial to secure new upward catalysts across the stock market," adding, "There is a high possibility that a stock market-friendly compromise will emerge during the National Assembly plenary session starting in September, but the noise between the government and the political sphere during the passage process could confuse investors." He also remarked, "It will be challenging to clarify issues surrounding tariffs, performance, and taxation within September."
There is also an expectation that choosing new leading stocks may be better than aggressive chasing purchases. Park Seung-young, a researcher at Hanwha Investment & Securities, stated, "The KOSPI index is stagnant at 3200, and the momentum of existing leading sectors is weakening," recommending a shift from large-cap to mid-small cap stocks and from shipbuilding, defense, and nuclear power to semiconductors, bio, and software in September.
Kang Dae-seung, a researcher at SK Securities, advised using dividends to enhance returns. He pointed out that from 2012 to 2016, when the Korean stock market fluctuated within a box range, the reinvestment return of high-dividend indices outperformed the KOSPI index.