In the second quarter, the KOSPI index surpassed the 9,000 mark for the first time, leading to a surge in retail investors' borrowing for investment, known as 'debt investment.' The average daily borrowing exceeded 60 trillion won, marking a record high. Securities firms are estimated to have earned over 1.3 trillion won in interest from this activity.
According to the Korea Financial Investment Association, the average balance of margin trading loans in the second quarter (April to June) was recorded at 35.9418 trillion won, a 15.9% increase from the first quarter's 31.0126 trillion won, reaching an all-time high.
Margin trading loans refer to the amount borrowed by investors from securities firms to purchase stocks that has not yet been repaid. The balance rose from the low 32 trillion won range at the beginning of the second quarter to 38.6328 trillion won by June 24, and has recently stabilized around 38 trillion won.
The average daily balance of securities collateral loans, which involve borrowing funds against stocks, was recorded at 25.9666 trillion won in the second quarter. Although this figure slightly decreased from the first quarter, it remained stable between 24 trillion and 26 trillion won.
Combining both margin trading and securities collateral loans, the average daily borrowing for the second quarter reached 61.9084 trillion won, an 8.5% increase from the first quarter's 57.0423 trillion won, setting a new record.
With the rise in borrowing, securities firms' interest income has also increased. Applying an average interest rate of 9% for margin loans and 8.5% for securities collateral loans, the estimated interest income for the second quarter is 808.6 billion won and 551.7 billion won, respectively, totaling 1.3603 trillion won. This represents an 8.7% increase from the first quarter's estimated income of 1.2508 trillion won.
In the first quarter, the ten largest domestic securities firms generated approximately 600 billion won in interest income from margin loans alone.
The recent stagnation of margin loan balances around 38 trillion won is attributed to securities firms' credit extension limits being capped at 100% of their equity, limiting their lending capacity. However, as major firms like NH Investment & Securities and KB Securities have begun to bolster their capital, there are expectations that the borrowing for investment will increase again if credit extension limits are raised.
* This article has been translated by AI.
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