Investor deposits, which topped 132 trillion won earlier this month to hit a record high, evaporated by more than 6 trillion won in just a week. The plunge is seen as the result of investor sentiment freezing rapidly amid extreme stock market volatility, coupled with forced selling and the depletion of funds used for averaging down.
According to the Korea Financial Investment Association on the 12th, as of on the 10th, investor deposits—cash set aside by individuals for investment—stood at 125.5844 trillion won.
Deposits, which were 132.0682 trillion won on the 4th, plunged by 6.4838 trillion won (4.9%) in four trading days. Margin loans for "debt-fueled investing" also topped 33 trillion won during the same period before shrinking to the 31 trillion won range, down by nearly 2 trillion won (5.6%).
The KOSPI started March at 6,244.1, fell to 5,093.5 (on the 4th), then closed at 5,609.9 on the day, showing double-digit daily swings. The situation is similar for KOSDAQ. From the 3rd to the 11th of this month, individuals made a net purchase of 14.8724 trillion won on the main board, but net sold 2.8188 trillion won on the KOSDAQ market.
There is also the aftermath of a surge in cases where bets on a rising market were liquidated in a falling market. Failed-settlement receivables—an ultra-short-term form of debt-fueled investing—fell sharply from 2.1488 trillion won on the 5th to 1.3304 trillion won on the 9th.
In failed-settlement transactions, if payment is not made within two trading days (T+2), the domestic stock settlement period after purchase, forced selling procedures begin. On the 5th, the KOSPI and KOSDAQ surged 9.6% and 14.1%, respectively, but plunged 6.0% and 4.5% two trading days later on the 9th. A significant portion of the decline is thus interpreted as liquidation supply. As of the previous day, the figure was 1.1779 trillion won, nearly half of the record high, and the ratio of forced selling to failed-settlement receivables fell from 6.5% to 3.4%.
However, some analysts say that if factors driving volatility—such as an end to the Iran war—are resolved, debt-fueled funds could rise again. Although investor sentiment has weakened somewhat compared to January and February, buying enthusiasm persists as individuals remain net buyers on the main board.
A securities industry official said, "As market volatility has widened recently, some short-term idle funds and leverage have flowed out," adding, "However, since individual investors' buying interest itself has not broken, leverage could increase again when the market stabilizes."
Meanwhile, to curb leverage risks, financial authorities recently asked the securities industry to strengthen its risk management framework. The Financial Supervisory Service (FSS), which summoned credit financing managers at major brokerages the previous day, called for stronger investor guidance so investors can fully understand the structure of leveraged transactions such as margin loans and the risks of forced selling.
Hwang Seon-oh, a deputy governor at the Financial Supervisory Service (FSS), said, "The current scale of margin loans and forced selling is manageable, but as market volatility widens, leveraged investing could become a risk factor, so brokerages should prepare preemptively."