Korean brokerages are tightening their grip on credit lending again as the KOSPI continues to scale new highs, fueling concerns about debt-financed investment, or "bittu."
According to the financial investment industry on Wednesday, Mirae Asset Securities (006800.KS) reclassified five stocks, including the KODEX Semiconductor exchange-traded fund (ETF), into Group F starting Wednesday and suspended new credit lending on them. Mirae Asset Securities restricts new loans and maturity extensions for stocks requiring 100% margin deposits or those classified under Group F.
Two of the five stocks — Heerim Architects & Planners and Aligned — are listed on the KOSDAQ, while Dong Ah Geological Engineering and the KODEX India Tata Group ETF, both listed on the main KOSPI market, are also included. Notably, the brakes have also been applied to an ETF holding semiconductor stocks, which have been driving the domestic market. Since stock group reclassifications typically occur when short-term overheating is a concern, the recent surge centered on semiconductor stocks appears to have been a factor. According to ETF Check, the KODEX Semiconductor posted a one-week return of 20% and a one-month return of 35%.
NH Investment & Securities (005940.KS) resumed credit lending on a limited basis on Wednesday. "As recent market volatility has caused credit balances to surge, we are operating with reduced margin loan purchase limits to protect investors and ensure customer trading convenience," an NH Investment & Securities official said. As a result, customers who already hold 10 billion won or more on a settlement basis cannot make new purchases through margin loans. New credit lending services will also be suspended for accounts with credit agreement limits exceeding 10 billion won when the margin loan balance exceeds 10 billion won.
The rapid increase in debt-financed investment lies behind brokerages' tightening of margin loan management. According to the Korea Financial Investment Association, the margin loan balance stood at 36.2548 trillion won as of the 26th. That is 642.4 billion won higher than a month earlier (35.713 trillion won) and a 33% jump from the same period a year ago (27.2864 trillion won). Another key factor cited is that securities firms have successively raised their target prices for major semiconductor stocks such as Samsung Electronics (005930.KS) and SK hynix (000660.KS), as well as their upper targets for the KOSPI, raising expectations for an extended market rally.
