Forced liquidation of retail leveraged investments, one month of forced sales totaling 1trillion2571hundred million
As stock-market volatility expanded, forced liquidations of retail investors’ positions increased. The cumulative amount of forced sales last month was recorded at 1trillion2571hundred million.
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As stock-market volatility increased, retail investors who borrowed money to invest have come under pressure from forced liquidations. Over the past month, beginning on 1the cumulative amount of forced sales reached 1trillion2571hundred million. These figures were compiled by the Korea Financial Investment Association.
According to the Korea Financial Investment Association’s compilation, on 6month 9the actual amount of forced sales compared with unsettled receivables from entrusted transactions was recorded at 1696hundred million. This amount was the largest daily total since 2023year 10month 18when 2767hundred million was recorded. The compilation is based on actual amounts executed by securities firms.
There were also large-scale forced sales on some other trading days. On 6month 5there were 1661hundred million, and on 6month 8there were 1391hundred million. The forced-sale amounts on those dates were reflected in Korea Financial Investment Association statistics.
Forced sales1000being recorded consecutively at levels of at least tens of billions of won2023year 10month onward is the first such occurrence. Forced sales are an action in which a securities firm forcibly sells shares held by an investor when the investor fails to repay funds borrowed from the firm within the prescribed period. This action can result in cases where the investor’s losses are crystallized.
KOSPI volatility expanded as geopolitical risks in the Middle East coincided with a sharp decline in U.S. semiconductor stocks. The increased volatility heightened the burden of losses for investors using credit financing. The statistics show that forced sales increased in this environment.
Statistics from the Korea Financial Investment Association were compiled based on the actual executed amount relative to unsettled receivables from brokerage transactions. Detailed figures related to forced sales and daily tallies can be found in materials published by the Korea Financial Investment Association. Investors should check the unsettled receivables and collateral status of their own accounts.
Sources: 파이낸셜뉴스 증권
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