Minus-account balances hit 43 trillion won, highest in 3 years and 7 months, as retail investors bet on a short-term rebound during two days of sharp market declines
Retail investors hoping for a rebound around the recent "Black Monday" market crash poured into debt-fueled investing through minus-account credit lines, pushing the combined balance at major commercial banks up by more than 600 billion won ($408 million) in just two days.
The combined personal minus-account balance at the five major commercial banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — stood at 42.9516 trillion won ($29.2 billion) as of Monday, according to financial industry data released Wednesday. The figure reflects actual loan balances drawn down, not credit limits, and is the highest since late November 2022, when the balance reached 43.1063 trillion won.
The five banks' combined minus-account balance climbed from 39.7877 trillion won at the end of April to 41.5324 trillion won at the end of May, then surged a further 1.4191 trillion won in just five trading days into June. The sharpest jump came on the two days the Kospi plunged — Friday and Monday — when the balance swelled by 608.5 billion won in total. Of that, 136.7 billion won was added on Friday and 471.9 billion won on Monday.
The Kospi had broken above the 8,000 mark during trading for the first time in history on May 15 and continued to climb, but fell 5.54 percent on Friday as the won-dollar exchange rate spiked and semiconductor shares weakened. On Monday, the index tumbled a further 8.29 percent, touching an intraday low of 7,442, with a circuit breaker triggered shortly after the opening bell to temporarily halt trading.
The extreme market volatility appears to have prompted investors to take on leveraged positions, betting that short-term rebound gains would outpace borrowing costs.
"Minus-account interest rates are quoted annually, but interest is charged only for the days the funds are actually used, and there are no early repayment fees," a commercial bank official said. "In a sharp rally, investors can generate returns that exceed the interest cost within just a few days, which has deepened the appetite for leveraged investing."
Expectations surrounding the "National Growth Fund," launched May 22, are also stoking market liquidity. President Lee Jae-myung said May 26 that he was considering offering fiscal or policy finance incentives to fund managers who perform well, fueling expectations that both the Kospi and Kosdaq could rally after the fund's formal establishment on Friday.
Markets are expected to remain volatile as foreign selling and domestic retail buying continue to clash. Analysts say debt-fueled investing by retail investors, emboldened by the wider price swings, is likely to persist for now.
"Given that the Kospi managed to rebound on Tuesday, there is a good chance that additional investment demand has flowed into the market," another banking industry official said. The Kospi closed Tuesday up 8.18 percent from the previous session at 8,096.93, its largest single-day gain on record.
won@heraldcorp.com
