Forced sales of shares by brokerages exceeded 80 billion won on the 15th, the day the KOSPI tumbled more than 7%. It was the second consecutive day that such sales topped 80 billion won, while customer deposits held at brokerages, a gauge of cash waiting to enter the market, fell for a third straight session. Mounting losses and repayment pressure from the market slide are shrinking the pool of money borrowed to buy stocks.
Forced sales against unpaid brokerage receivables totaled 80.4 billion won on the 15th, according to the Korea Financial Investment Association on the 17th. That followed 89.3 billion won on the 14th, marking two straight days above the 80 billion won mark. The figure for the 14th was the highest in about three months, since the 122 billion won recorded on July 31 this year.
Forced selling occurs when a brokerage liquidates an investor's shares without consent, either because the investor failed to pay for a stock purchase within the deadline or because the value of pledged shares fell below a set threshold. With losses widening on falling share prices and repayment obligations coming due, more investors are seeing their holdings sold off.
Customer deposits are also declining. As of the 15th, investor deposits stood at 96.91 trillion won, down 515.9 billion won from 97.43 trillion won the previous day. They have fallen for three straight sessions from 100.44 trillion won on the 12th, dropping below the 100 trillion won level. Deposits have shrunk by 3.53 trillion won over that period. The margin loan balance, which shows how much investors have borrowed from brokerages to buy stocks, fell back to the 32 trillion won range for the first time in about two weeks, since the 29th of last month. With forced sales staying elevated and both deposits and margin loans declining, caution is building in the market.
The KOSPI fell for seven consecutive sessions from the 6th through the 15th. On the 15th, it closed at 5,554.22, down 454.59 points, or 7.57%, from the previous session. Samsung Electronics and SK hynix led the decline, plunging 9.48% and 11.06% respectively. It was the first seven-session losing streak since September 2024. On the 16th, the KOSPI rebounded 2.05% as foreign investors turned net buyers for the first time in nine sessions. Still, the gain narrowed late in the day after reaching as much as 4.6% intraday, suggesting investor sentiment has yet to fully recover.
Views are split on where the market goes from here. Some in the industry expect a sustained rebound in the KOSPI, arguing that the earnings fundamentals of chipmakers remain solid enough for the recent bounce to extend into an uptrend. Others say it is too early to be optimistic about a sustained rally, noting that the 16th's gain was small relative to the previous day's plunge and that concerns over AI-related credit risk persist.
"It is true that the KOSPI's recent decline was excessive relative to earnings fundamentals," an official in the securities industry said. "But with significant caution surrounding the AI industry, which had been the driver of the rally, it is too early to expect a sustained upturn."
