Individual investors sold 4.15 trillion won on KOSPI on the 14th following widespread margin calls and panic selling. The mass liquidation occurred after the previous day's market plunge and renewed Middle East geopolitical tensions. KOSPI closed 0.72% higher at approximately 6856 as institutional investors absorbed the selling pressure, while KOSDAQ fell 1.92%.
Individual Investors Sold 4.15 Trillion Won on KOSPI
Individual investors sold 4.15 trillion won on KOSPI on the 14th. Including nearly 1 trillion won sold during pre-market trading, total individual selling reached approximately 5 trillion won. Private equity funds absorbed 1.1294 trillion won and financial investment firms absorbed 1.8949 trillion won of the selling volume.
The selling concentrated in semiconductor stocks. Individual investors sold 2.5 trillion won of SK Hynix, 1.062 trillion won of Samsung Electronics, and nearly 103 billion won of SK Square on the 14th. SK Hynix fell as much as 9.05% during midday trading.
Margin Calls Triggered Forced Liquidations
A significant portion of the selling resulted from margin calls. According to the Korea Financial Investment Association, forced liquidation amounts relative to margin debt reached 1.422 trillion won on the 9th, then decreased to 816 billion won on the 10th and 262 billion won on the 13th.
Kim Seok-hwan, researcher at Mirae Asset Securities, stated that securities firms had raised margin requirements to 40%, which reduced margin trading volume and decreased margin call risk. However, credit financing accounts experienced large-scale forced liquidations following the previous day's over 9% KOSPI decline.
Credit Balance Declined 2 Trillion Won Since Early July
Credit financing balance decreased from 37.72 trillion won on July 2 to 35.57 trillion won on July 10. According to KOSCOM data, Samsung Electronics credit balance decreased by 234.3 billion won from the 7th to the 13th. Hyundai Motor and Naver, which fell over 10% in one week, saw credit balance decreases of 87.9 billion won and 33.5 billion won respectively. Samsung Electro-Mechanics, which dropped 21% during the same period, experienced a 32 billion won credit balance decline.
A capital market official stated that forced liquidation volume on the 14th likely exceeded 1 trillion won due to the previous day's sharp decline.
Foreigners Bought SK Hynix at Lower Prices
Foreign investors sold Samsung Electronics but bought SK Hynix and SK Square on the 14th. They engaged in bottom-fishing after KOSPI temporarily fell to 6448.86 during morning trading due to margin calls.
Goldman Sachs Identified Leveraged ETF Forced Selling as Volatility Driver
Goldman Sachs released a report titled "KOSPI Tests Key Technical Support Levels" on the 14th, identifying 6800 as an important support level. The report stated that if 6800 breaks, the next support level could be 6500. Goldman Sachs assessed that "one of the main causes of extreme intraday volatility was the rapid deleveraging (forced selling) of single-stock leveraged exchange-traded funds (ETFs)."
Citi Securities stated on the 14th that "when KOSPI 200 futures fell below 1095, the National Pension Service's domestic stock allocation is estimated to have reached 26.8%, but now it's around 1085." The report added that "it remains uncertain whether the National Pension Service will intervene to buy stocks until the index reaches around 1000-1066," explaining that stock purchasing capacity is limited considering the still-high portfolio volatility.
FAQ
Q: How much did individual investors sell on KOSPI on the 14th?
A: Individual investors sold 4.15 trillion won on KOSPI on the 14th, with total selling reaching approximately 5 trillion won including pre-market trading.
Q: What did Goldman Sachs identify as the main cause of extreme volatility?
A: Goldman Sachs stated that one of the main causes of extreme intraday volatility was the rapid deleveraging (forced selling) of single-stock leveraged exchange-traded funds (ETFs).
Q: How much did credit financing balance decrease since early July?
A: Credit financing balance decreased from 37.72 trillion won on July 2 to 35.57 trillion won on July 10, a decline of approximately 2 trillion won.
