One-month forced liquidation 1trillion2,571hundred million won, more individual investors liquidated
The cumulative amount of forced liquidations targeting individual investors over the past month exceeded 1trillion2,571hundred million won. 6Since the start of the month, daily forced liquidations exceeded 1,000hundred million won on several occasions.
As stock market volatility has increased, individual investors who invested on credit are facing pressure from forced liquidation. According to figures compiled by the Korea Financial Investment Association, the cumulative amount of forced liquidations over approximately one month from the 1th reached 1trillion2,571hundred million won. The scale of these forced liquidations has again highlighted the risks of leveraged investing.
This month, the forced liquidation amount on the 9th was recorded at 1,696hundred million won. 5It was larger than the 1,661hundred million won recorded on the 9th. The amount on the
8th was 1,391hundred million won. 2023Since 10of 18the 2,767th, after the amount of
That forced liquidations recorded consecutive 1,000amounts in the hundred-million-won range is also 2023years 10months since. This record is at a level comparable to a time when credit trading was active. Securities firms’ collateral management and automatic liquidation are affecting actual trading.
Forced liquidation is a system in which a securities firm forcibly sells the shares held by an investor when the investor fails to repay funds borrowed from the firm within the prescribed period. When a forced liquidation occurs, the investor’s shares are put on the market for sale. In this process, the individual investor’s loss is finalized.
According to industry explanations, the increase in forced liquidations was largely driven by sharp fluctuations in the KOSPI as Middle East geopolitical risks coincided with a steep decline in U.S. semiconductor stocks. Increased market volatility triggered growth in credit balances and forced liquidations. Among investors, the need to manage credit exposure has been raised.
Sources: 파이낸셜뉴스 증권
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