The scale of "debt investing" (borrowing to invest) by investors under age 20 jumped 2.5 times in half a year. The growth rate was the steepest among all age groups. As market volatility increased this year, minors' margin trading also appears to have risen quickly.
On the 2nd, according to data submitted to Kim Sang-hoon of the People Power Party by the 10 major domestic securities firms—Mirae Asset, Korea Investment, Samsung, KB, NH Investment, Shinhan Investment, Meritz, Kiwoom, Hana, and Daishin Securities—the margin loan balance for those under age 20 stood at 5.3 billion won at the end of June, up 152.4% from 2.1 billion won at the end of last year.
A margin loan means an investor borrows money from a securities firm to buy stocks. Using the purchased stocks as collateral, the debt typically must be repaid within 90 to 180 days. It is regarded as an indicator gauging the scale of individual investors' "debt investing."
The growth rate of minors' debt investing was the highest among all age groups. Those age 70 and older (56.8%), 60 and older to under 70 (42.3%), and 30 and older to under 40 (40.4%) followed. The age group with the lowest growth rate was 50 and older to under 60 (28.1%).
However, the overall scale itself was not large. As of the end of June, the age group with the largest margin loan balance was 50 and older to under 60, reaching 9.7978 trillion won. Next were 40 and older to under 50 (8.0125 trillion won), 60 and older to under 70 (7.1371 trillion won), 30 and older to under 40 (3.7175 trillion won), 70 and older (2.4709 trillion won), and 20 and older to under 30 (476.8 billion won).
Forced-liquidation amounts also surged. A forced liquidation occurs when a borrowing investor's collateral ratio falls below a certain level, prompting a securities firm to demand additional payment, and if the ratio is not restored, the firm forcibly liquidates the stocks in the market. For minors, monthly forced-liquidation amounts on margin loans rose from the 30–40 million won range from January to April to 160 million won in May and 200 million won in June.
Severe market volatility appears to have increased individual investors' margin trading. The KOSPI soared from the 4,000 level to the 9,000 level this year before plunging to the 5,500 level, showing extreme volatility. In a rising market, profit expectations and, in a sharp downturn, bargain-hunting sentiment likely combined to expand margin transactions.