The Financial Supervisory Service said worries are growing about investor losses as the "debt-fueled investing" trend spreads across the financial sector, and it called on the securities industry to enforce thorough risk management and consumer protection.
On the 7th, the Financial Supervisory Service, chaired by Lee Chan-jin, held the third consumer risk response council to review key issues related to financial consumers and discuss response measures. The meeting assessed recent stock market volatility and the state of consumer protection across the financial sector, and focused on ways to strengthen investor protection.
Lee said, "With high volatility in the domestic stock market persisting, market distortions are deepening, including a concentration of flows into specific stocks," adding, "If a household's financial assets become overly concentrated in a particular asset class or if investing uses leverage beyond a tolerable level, the household's financial soundness could be seriously undermined," expressing concern.
In fact, debt-fueled investing has been steadily increasing. The balance of margin loans surged from 2.73 trillion won at the end of 2025 to 3.73 trillion won at the end of June 2026. Over the same period, the average daily value of forced sales in unsettled transactions also swelled more than eightfold, from 7.1 billion won to 52.7 billion won.
The concentration of investment in specific stocks is also clear. From May 27 to June 22, individual investors recorded net purchases of 8.9 trillion won (92% of all net purchases) in single-stock leveraged ETFs. During the same period, the turnover ratio of the products was 105.3%, and the average daily trading value reached 9.6 trillion won.
The Financial Supervisory Service urged financial companies to make every effort in risk management for consumer protection. It asked them to fully explain to investors the structure and risks of leveraged investing and to strengthen internal controls so that sales practices that fuel "debt-fueled investing" do not occur. It also said it will review whether there is excessive marketing for single-stock leveraged ETFs.