The KOSPI has fallen for seven consecutive trading days, dropping to around 5,500 points, leading to margin calls from investors who borrowed money to purchase stocks, totaling nearly 300 billion won over the past week.
As market volatility increases, buying interest in domestic and international bonds, considered safe assets, has continued. Conversely, in the U.S. stock market, domestic investors have been seen heavily investing in semiconductor triple-leveraged exchange-traded funds (ETFs), betting on a market rebound.
According to the Korea Financial Investment Association on October 17, the total amount of margin calls from October 6 to 15 reached 298.1 billion won. Notably, on October 14 and 15, the margin call amounts were 89.3 billion won and 80.5 billion won, respectively, both exceeding 80 billion won.
A margin call occurs in stock trading when forced liquidation happens due to insufficient collateral. If an investor fails to repay borrowed funds from a brokerage or if the value of the stocks pledged as collateral falls below a certain threshold, the brokerage can forcibly sell the investor's stocks without consent to recover the debt.
The increase in margin calls is attributed to the reduced repayment capacity of investors who borrowed to buy stocks as the KOSPI plummeted.
From October 6 to 15, the KOSPI fell for seven consecutive trading days, reaching a low of 5,554.22. However, on October 16, it rebounded for the first time in eight days, closing at 5,668.05.
Investor deposits, which serve as standby funds in the stock market, have also decreased. As of October 15, investor deposits totaled 96.9 trillion won, down 4.1% from 101.4 trillion won on October 6.
In contrast, the domestic and international bond markets have seen a steady influx of funds from individual investors.
Net purchases of domestic bonds by individual investors totaled 1.16 trillion won over the ten trading days from October 1 to 16, maintaining a high level compared to 2.96 trillion won during the same period last month. Last month, net purchases of domestic bonds by individuals reached 4.02 trillion won, the highest in two years and five months since April 2024.
U.S. Treasury bonds have also seen net buying for four consecutive months. According to the Korea Securities Depository's securities information portal, domestic investors' net purchases of U.S. bonds from October 1 to 15 amounted to $1.21 billion (approximately 1.61 trillion won).
After a net sell of $166 million in June, net buying switched to $888 million in July, continuing through this month.
This month, net purchases of U.S. stocks reached $3.5 billion (approximately 4.72 trillion won), 3.5 times higher than the previous month's $1 billion. This suggests that funds may have shifted to the U.S. market, which has experienced a relatively smaller decline compared to the domestic market.
Domestic investors have also heavily invested in semiconductor-related leveraged ETFs. Over the past week, net purchases of the 'SOXL' ETF, which tracks the daily returns of the U.S. semiconductor index at three times the rate, reached $2.6 billion (approximately 3.47 trillion won), the highest amount.
Following that were the 'KORU' ETF, which tracks the domestic market at three times the rate ($235 million), and IonQ, a U.S. quantum computing company ($10.4 million).
The recent weakness in the domestic stock market and semiconductor sector has led to increased demand for bets on a rebound.
Park Sung-jin, a researcher at Hana Securities, advised, "The ETF portfolio should maintain core positions in representative index products while adjusting 'satellite' positions based on interest rates and earnings direction."
* This article has been translated by AI.
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