Korean Margin Debt Nears 34 Trillion Won as Forced Selling Accelerates

Closing figures are displayed on an electronic board at the Korea Exchange in Yeouido, Seoul, on Oct. 15, 2026. The KOSPI plunged 454.59 points, or 7.57%, to close at 5,554.22, while the KOSDAQ fell 63.06 points, or 7.65%, to 760.82. As South Korean stocks continue to plunge, fears of forced liquidation are becoming a reality for retail investors who borrowed money to buy shares. Many investors increased their margin borrowing in anticipation of a market rebound, only to face an unexpected downturn. Falling stock prices have triggered forced selling as collateral values drop below required levels, creating a vicious cycle that puts further downward pressure on the market. According to the Korea Financial Investment Association, outstanding margin loans stood at 33.71 trillion won, or approximately $25.05 billion, as of Oct. 14. The balance had reached 34.25 trillion won on Oct. 13, surpassing the 34 trillion won mark for the first time in roughly three months. After falling to around 27 trillion won in early August, outstanding loans surged by more than 6 trillion won in just over two months. Investors using margin loans risk having their shares forcibly sold if falling stock prices push their collateral maintenance ratios below required thresholds. Large-scale forced selling is already taking place. The value of forced liquidations against unsettled brokerage receivables reached 89.34 billion won on the previous day. Forced selling accounted for 7.2% of unsettled brokerage receivables, exceeding the 7.1% recorded on July 31, when market volatility was particularly severe. Since the beginning of October, shares worth 253.38 billion won have been forcibly sold at prices below prevailing market levels. The steep decline in stock indexes has intensified investor anxiety. The KOSPI plunged 7.57% on Oct. 15 to close at 5,554.22, falling below its previous low of 5,593.56 recorded on July 30. Weakness in major semiconductor stocks, including Samsung Electronics and SK hynix, added to downward pressure on the index, leaving investors who had attempted to buy the dip exposed to further losses. The government, however, maintained that the underlying fundamentals of South Korea’s economy and stock market remain sound despite the recent surge in volatility. At a joint market monitoring meeting with relevant agencies on Oct. 16, the Ministry of Finance and Economy cited the International Monetary Fund’s upward revision of South Korea’s growth forecast from 2.6% to 3.3%, along with improving operating profit forecasts for listed companies. Officials assessed that the fundamentals of the real economy had not deteriorated. Brokerage analysts, meanwhile, expect extreme market volatility to persist for the time being. Han Ji-young, an analyst at Kiwoom Securities, said investors should prepare for additional declines driven by market supply-demand dynamics and investor sentiment, suggesting that the KOSPI could fall as low as the 5,100 level. Kim Seong-geun, an analyst at Mirae Asset Securities, also advised closely monitoring changes in external conditions, including revenue trends among AI model developers and U.S. real interest rates. Financial regulators and securities firms have begun implementing emergency risk management measures. Financial Services Commission Chairman Lee Eok-won called for restraint in excessive margin lending and stronger customer protection during an emergency stock market review meeting. Hana Securities subsequently barred margin purchases of Samsung Electronics and SK hynix, while Mirae Asset Securities and Samsung Securities decided to raise their margin deposit requirements from 45% to 50% starting Oct. 19. South Korea’s stock market has undergone a steep correction in recent weeks. The KOSPI has lost approximately 1,450 points, or 20.7%, in just two weeks since the beginning of October. The index fell for seven consecutive trading sessions from Oct. 6 through Oct. 15, slipping below the 6,000 mark. The KOSPI 200 Volatility Index (VKOSPI), a gauge of market uncertainty, surged from 36.8 on Oct. 8 to 55.4 on Oct. 15.