As the KOSPI has swung sharply between the 7,000 and 9,000 levels over the past two weeks, the fervor for so-called "debt investing" (borrowing to invest) among individual investors shows little sign of cooling. With margin settlement failures in entrusted stock transactions—an ultra-short-term leverage tool—surging, forced liquidation through margin calls has also ballooned to an all-time record.
According to the Korea Financial Investment Association on the 11th, the actual margin call amount versus unsettled receivables in entrusted stock transactions totaled 169.8 billion won on the 9th. It was a record high. In just this month alone (June 1–9), margin call amounts exceeded 550 billion won.
That nearly matches the entire margin call total of 707.7 billion won in the previous month. It more than doubled the April monthly amount (264.2 billion won) and, within just a week, approached the level recorded in March (about 550 billion won), when the market wobbled on the shock of the U.S.-Iran war.
Unsettled receivables in entrusted stock transactions are classified as ultra-short-term debt-investing funds. In these transactions, an investor borrows a securities firm's money to buy stocks and repays within two trading days (T+2), Korea's stock settlement period. If the investor fails to pay within two trading days, the securities firm forcibly sells the stocks on the third trading day.
This is attributed to heightened KOSPI volatility in June. As U.S. Government Bonds yields stayed elevated, tightening concerns resurfaced, and Broadcom issued earnings guidance that fell short of market expectations, adding fears of a slowdown in artificial intelligence (AI) investment. The KOSPI at one point tried to break above the 9,000 level but then was pushed down into the 7,000 range.
In fact, the KOSPI fell 1.84% on the 4th and 5.54% on the 5th, then plunged 8.29% on the 8th and 4.52% on the 10th. Because margin calls typically occur three trading days after stock declines, the market is watching the possibility that sizable additional margin call supplies also hit on the 10th and 11th.
Credit financing for stock purchases—a gauge of individuals' debt investing—returned to an all-time record after May 29. As of the 9th, outstanding credit financing stood at 3.79 trillion won, just 100 billion won shy of May 29 (3.8 trillion won). The June average is also above 3.7 trillion won. That is nearly double the roughly 1.8 trillion won level during the same period a year earlier.
Leverage investing is also active. According to Koscom's ETF Check, over the past two weeks individual investors were net buyers of nearly 8 trillion won in just four products: KODEX SK hynix Single-Stock Leverage (2.3881 trillion won), TIGER SK hynix Single-Stock Leverage (2.1696 trillion won), KODEX Samsung Electronics Single-Stock Leverage (1.9815 trillion won), and TIGER Samsung Electronics Single-Stock Leverage (1.4898 trillion won).
Experts advise caution on expanding leverage investing and debt investing in a market with rising volatility. Noh Dong-gil, a researcher at Shinhan Investment & Securities, said, "When U.S. hardware is wobbling and both interest rates and oil prices are acting as simultaneous headwinds, the correction inevitably deepens," adding, "It is prudent to be wary of aggressively increasing volatility-sensitive leveraged positions."