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S. Korea's margin loans plunge amid market crash

All News 08:58 March 19, 2020

SEOUL, March 19 (Yonhap) -- Margin lending in South Korea plunged over the past week amid a coronavirus-induced stock market crash, data showed Thursday.

Outstanding margin loans to retail investors came to 8.54 trillion won (US$6.8 billion) as of Tuesday, down 1.5 trillion won from three sessions earlier, according to the Korea Financial Investment Association.

The amount represents the lowest level in nearly six months. Margin loans refer to those that retail investors take out from brokerage houses to invest in stocks.

Margin loans taken to buy stocks traded on the main KOSPI market stood at slightly over 4 trillion won, with those for shares registered with the tech-heavy, secondary KOSDAQ market taking up the remainder.

S. Korea's margin loans plunge amid market crash - 1

Outstanding margin loans had been on a steady rise since mid-January before surpassing 10.5 trillion won on Feb. 20. But the amount started to nose-dive Monday amid a historic jolt to global markets triggered by the coronavirus pandemic.

A decline in outstanding margin loans usually points to waning investor expectations for rising stock prices.

With concerns escalating over the fast spread of COVID-19 in Europe and the United States, the benchmark Korea Composite Stock Price Index (KOSPI) tumbled 4.86 percent to 1,591.20 on Wednesday, its first close below the 1,600-point level in nearly 10 years.

The number of coronavirus infections has been rising rapidly in Western nations, though South Korea has reported fewer than 100 cases for four consecutive days since Saturday.
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