Credit margin balances in South Korea's KOSDAQ market decreased by 2.3 trillion won between May 27 and July 10, while margin balances for large-cap stocks Samsung Electronics and SK Hynix reached a combined estimated 12.5 trillion won—1.7 times the entire KOSDAQ margin balance as of July 10. The shift occurred as securities firms tightened credit standards for volatile small-cap stocks, restricting new margin loans and maturity extensions. Industry sources attributed the reallocation to standard risk management protocols that prioritize liquidity-rich large-caps during periods of heightened volatility, creating structural pressure as existing small-cap borrowers faced repayment obligations while new capital inflows were blocked.
KOSDAQ Margin Balance Declined 23.4% as KOSPI Balance Rose
According to the Korea Financial Investment Association, KOSDAQ credit margin balances fell from 9.86 trillion won on May 27 to 7.55 trillion won on July 10, a decrease of 2.3 trillion won or 23.4%. During the same period, KOSPI margin balances increased from 26.83 trillion won to 28.02 trillion won, a rise of 1.19 trillion won or 4.4%. The data showed credit capital exiting KOSDAQ while simultaneously expanding in the main board market.
Samsung and SK Hynix Combined Margin Balance Reached 12.5 Trillion Won
Estimates based on market capitalization ratios indicated Samsung Electronics held approximately 6.28 trillion won in margin balances, while SK Hynix held approximately 6.23 trillion won as of July 10. The combined total of 12.51 trillion won represented roughly 1.7 times the entire KOSDAQ credit margin balance on the same date. A securities industry official stated that large-cap stocks were not completely exempt from credit regulations, but faced relatively less concentrated restrictions compared to certain KOSDAQ small-cap stocks.
Securities Firms Cite Risk Management Protocols for Credit Tightening
A securities company representative explained that strengthening credit standards for small-cap stocks first during periods of high volatility is a common industry risk management approach. The representative noted that when margin maturity extensions are simultaneously restricted during sharp declines, a structure emerges where new purchases are blocked and existing investors must sell to repay obligations, potentially increasing supply-side pressure. Industry sources described the measures as results of risk management considering individual stock risk levels and liquidity, noting that collateral recovery is relatively easier for high-volume large-caps while small-cap collateral value can deteriorate rapidly during downturns, necessitating more conservative credit policies.
Another industry official acknowledged that while credit policies are determined by each securities firm based on stock-specific risk, liquidity, and internal risk assessments, the impact of existing borrower management methods and credit standards on overall market liquidity warrants examination during sharp market declines.
FAQ
What happened to KOSDAQ margin balances between May 27 and July 10?
KOSDAQ credit margin balances decreased by 2.3 trillion won, or 23.4%, from 9.86 trillion won on May 27 to 7.55 trillion won on July 10, according to Korea Financial Investment Association data.
Why did credit shift from KOSDAQ to large-cap stocks?
Securities firms tightened credit standards for volatile small-cap stocks, restricting new margin loans and maturity extensions, while large-cap stocks faced relatively less concentrated restrictions. Industry sources attributed this to risk management protocols prioritizing stocks with higher liquidity and easier collateral recovery.
How do Samsung and SK Hynix margin balances compare to KOSDAQ's total?
The combined estimated margin balance for Samsung Electronics and SK Hynix reached approximately 12.5 trillion won as of July 10, representing roughly 1.7 times the entire KOSDAQ credit margin balance on the same date.
