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Stock loans close to 8 tln won on bullish outlook

All Headlines 10:28 August 26, 2016

SEOUL, Aug. 26 (Yonhap) -- South Korea's stock purchase on credit has hit a fresh high of nearly 8 trillion won (US$ 7.2 billion) with more investors borrowing money from brokerage firms to bet on a bullish market, data showed Friday.

Outstanding margin loans jumped to 7.78 trillion won as of Wednesday, the highest level of this year, according to the data compiled by the Korea Financial Investment Association and financial information provider FnGuide.

The finding has added to concerns over possible damages should there be sudden price swings.

The volume of margin loans here declined starting in mid-June but rebounded to 6.73 trillion won on June 29.

In particular, the volume of margin loans at the secondary KOSDAQ market sharply rose to around 4.4 trillion won from 3.7 trillion won early last month, while that at the main KOSPI bourse stayed around 3.3 trillion won.

Some market observers attributed the increase in margin loans to a "structural change" amid low economic growth and interest rates.

"Outstanding margin loans are on a constant rise from 2014, not a temporary trend based on speculation demand," Kim Yong-koo, an analyst at Hana Financial Investment Co., said. "In general, the trend is viewed as part of a portfolio of household assets under low growth and interest circumstances."

He advised those buying stocks on credit to be more mindful of the possibility of price fluctuations.


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