Key facts
- South Korean retail investors borrowed a record 61.98 trillion won ($40.5 billion) from securities firms in Q2.
- This represents an increase from 57.42 trillion won in the first quarter.
- Margin loans, used to purchase stocks, averaged 46.95 trillion won in Q2.
- Stock-backed loans averaged 25.97 trillion won in the same period.
- Securities firms are estimated to have earned over 1.4 trillion won in interest income from these loans.
South Korean retail investors significantly increased their borrowing from securities firms in the second quarter, reaching a record high amid a strong stock market rally. The combined average daily balance of margin loans and stock-backed loans hit 61.98 trillion won ($40.5 billion) between April and June, up from 57.42 trillion won in the previous quarter.
Margin loans, which investors use to purchase stocks and are considered a key indicator of debt-funded investing, averaged 46.95 trillion won in the second quarter, a 15.9% increase from the first quarter's average of 31.01 trillion won. Additionally, stock-backed loans, allowing investors to borrow against pledged securities, averaged 25.97 trillion won during the same period.
This surge in borrowing is expected to have boosted earnings for domestic securities firms, which are estimated to have collectively earned over 1.4 trillion won in interest income from these lending activities in the second quarter. Industry officials suggest that much of the borrowed capital was likely reinvested into the equity market as investors sought to capitalize on the recent rally. The benchmark KOSPI index saw a substantial increase of approximately 68% from the end of March to the end of June.