Margin debt among under-20 investors surges 2.5-fold in six months

Margin debt among investors under 20 has more than doubled in just six months, growing at the fastest pace of any age group even as the absolute amounts remain small compared with older investors. Concerns are mounting that minors, who may lack the financial judgment to manage leveraged positions, face outsized loss risks — and that some parents may be exploiting their children's accounts as a vehicle for debt-fueled investing.

Data submitted to the office of People Power Party lawmaker Kim Sang-hoon by 10 of South Korea's largest brokerages — Mirae Asset Securities, Korea Investment & Securities, Samsung Securities, KB Securities, NH Investment & Securities, Shinhan Investment, Meritz Securities, Kiwoom Securities, Hana Securities and Daishin Securities — show that the margin financing balance for investors under 20 rose 152.4 percent, from 2.1 billion won ($1.46 million) at the end of last year to 5.3 billion won at the end of June.

That compares with a 36.3 percent increase in the overall margin financing balance over the same period, which climbed from 23.2 trillion won to 31.62 trillion won — making the under-20 surge far outpace the broader market.

Margin financing refers to borrowing money from a brokerage to purchase shares, with the purchased stock serving as collateral. Borrowers are typically required to repay within 90 to 180 days. It is widely regarded as the primary gauge of debt-fueled investing activity.

As of the end of June, investors aged 50 to 59 held the largest margin financing balance of any age group, at 9.8 trillion won. They were followed by the 40–49 age group at 8.01 trillion won, the 60–69 group at 7.14 trillion won, the 30–39 group at 3.72 trillion won, those 70 and older at 2.47 trillion won, and the 20–29 group at 476.8 billion won.

However, the sharpest increase from the end of last year was recorded among those under 20, at 152.4 percent.

Growth rates for other age groups included 56.8 percent for those 70 and older, 42.3 percent for the 60–69 group, and 40.4 percent for the 30–39 group. The 50–59 group posted the smallest percentage gain at 28.1 percent, though in absolute terms its balance grew by 2.15 trillion won — the largest increase of any age group.

Forced liquidations — the dark side of margin investing — have also jumped sharply. For investors under 20, the value of margin loans settled through forced liquidation ran at 30 million to 40 million won per month from January through April, then surged to 160 million won in May and 200 million won in June. More than 70 percent of the 510 million won first-half total was concentrated in those two months alone.

Forced liquidation occurs when the collateral value of shares purchased with borrowed funds falls below a required threshold, or when a borrower fails to repay on time, prompting the brokerage to sell the investor's holdings without consent. In a falling market, losses can snowball rapidly.

Market participants point to a confluence of factors that amplified Kospi volatility in recent months: the launch of single-stock leveraged ETFs in late May, concerns that AI semiconductor stocks had peaked, and a renewed flare-up in tensions between the United States and Iran.

Samsung Electronics and SK Hynix — the two semiconductor heavyweights that together account for roughly 50 percent of the Kospi's total market capitalization — swung sharply in both directions. Single-stock leveraged and inverse ETFs tracking those moves at twice the magnitude amplified the turbulence considerably, analysts note.

As an index that had been climbing steeply began to gyrate, accounts carrying heavy leverage were the first to absorb the shock of forced liquidations.

Ultra-short credit trading through unsettled-balance transactions also increased. The outstanding unsettled balance for investors under 20 rose from 120 million won at the end of January to the 200 million won range by the end of June. Over the same period, the overall unsettled balance jumped from 889.1 billion won to 1.1 trillion won.

Unsettled-balance trading is an ultra-short-term form of credit in which an investor borrows from a brokerage to buy shares. If the outstanding balance is not repaid within two business days, the brokerage typically forces the sale of the investor's holdings on the next trading day to recover the debt.

The total value of forced liquidations tied to unsettled balances in the first half of this year reached 2.41 trillion won — already surpassing the full-year 2025 figure of 1.46 trillion won in just six months. For investors under 20, the first-half forced liquidation amount from unsettled balances came to 1.85 billion won, a sharp increase from the 980 million won recorded for all of last year.

Hong Ji-yeon, a senior researcher at the Korea Capital Market Institute, said the surge in margin activity reflects a combination of growing retail investor participation, demand concentrated in market-leading themes, and a preference for short-term trading — all of which have fed into heavier use of leverage. "There is a continuing need to raise investor awareness, review trading behavior, strengthen policy monitoring, and pursue market stabilization measures," she said.