Cash parked for stock investment in South Korea has fallen to its lowest level in nine months as the domestic stock market extends its decline. Forced sales of shares bought with borrowed money also topped 50 billion won for a fifth straight trading session as sentiment weakened amid the slide.
Investor deposits stood at 92.0966 trillion won ($64 billion) as of the previous session, down 2.3063 trillion won from a day earlier, the Korea Financial Investment Association said on the 20th. That is the lowest level since Jan. 16, when deposits totaled 91.2181 trillion won, roughly nine months ago. Investor deposits are funds that investors leave with brokerages to buy stocks and are used as a key gauge of available buying power in the market.
Leveraged investing is also shrinking. The margin loan balance came to 31.1082 trillion won as of the previous session, down 1.1445 trillion won in a single day. That is the smallest figure since Aug. 18, when the balance stood at 31.1045 trillion won. Margin loans refer to money investors have borrowed from brokerages to buy stocks and have not yet repaid.
The burden of forced sales is growing as the market keeps falling. Forced sales against unpaid brokerage settlements totaled 54.2 billion won on the same day, down slightly from 57.2 billion won in the previous session, but the figure has exceeded 50 billion won for five consecutive sessions since the 13th. Forced sales came to 59.3 billion won on the 13th, 89.3 billion won on the 14th and 80.5 billion won on the 15th.
Forced sales as a share of unpaid settlements rose 0.3 percentage points to 4.4% from 4.1% in the previous session. A forced sale occurs when a brokerage liquidates an investor's shares to recover unpaid amounts, either because the investor fails to pay for a purchase or because the value of the collateral falls below a set threshold. Falling share prices have eroded collateral values, and the resulting forced selling has added to market jitters.
