It was found that the average daily amount of forced sales at major domestic securities firms in July, when the stock market correction began in earnest, surged 13 times from a year earlier. As the domestic stock market jumped this year, more individual investors chased high-risk, high-return investments, which is seen as driving an increase in "debt investing (borrowing to invest)."

As Middle East war tensions rise, the KOSPI turns lower for the first time in three days on the afternoon of the 2nd, with closing figures including the KOSPI displayed on the dealing room board at Hana Bank's head office in Jung-gu, Seoul. The KOSPI closes at 6,562.72, down 3.99% from the previous session; the KOSDAQ ends at 803.98, down 2.10%; and the dollar–won exchange rate in the Seoul foreign exchange market records 1,368.7 won, down 1.7 won from the 3:30 p.m. weekly close the previous day. /Courtesy of News1

According to data submitted by People Power Party lawmaker Park Sung-hoon, a member of the National Policy Committee, from the Korea Financial Investment Association on the 2nd, margin calls related to margin lending for stock purchases and loans secured by custodial securities at 10 domestic securities firms averaged 2,258 accounts and 43.868 billion won per day in July this year.

Compared with the same period last year (622 accounts, 3.377 billion won), the average daily number of accounts subject to forced sales jumped 3.6 times, and the average daily amount surged 13 times.

The pace of increase also accelerated this year, the data showed. Average daily forced sales, which were 487 accounts and 2.947 billion won in January, roughly doubled to 911 accounts and 8.274 billion won in May, and in June, when the market correction took hold, reached 1,511 accounts and 20.414 billion won, topping 20 billion won for the first time.

The scale of forced sales in July this year was also the highest on a monthly average daily basis since tracking began in 2022. The previous records for the highest monthly average daily forced sales were 17.894 billion won in September 2022 and 17.869 billion won in June of the same year. But in July this year, it surpassed 40 billion won for the first time.

On top of that, the number of individual professional investors also appears to have surged. As of the end of July this year, there were 26,282 individual professional investors. The figure fell from 26,672 at the end of 2022 to 22,951 at the end of 2023 and 20,820 at the end of 2024, but rebounded to 22,495 at the end of last year.

Park said, "The near-3,800 surge in individual professional investors in just seven months is a signal that financial authorities should not take lightly," noting, "There must be no cases where the label of professional investor is used to hide behind and undermine investor protection or to exploit a regulatory detour for selling high-risk products."

Park added, "Rather than shifting risk to individuals under the pretext of expanding investment choice, authorities should quickly put in place effective investor protection mechanisms to prevent forced sales and cascading losses."

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