May Forced Liquidations Hit 707.7 Billion Won, Year's Highest

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an AI-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. Leveraged Retail Investors Cry Out in Volatile Market…May Forced Liquidations of 707.7 Billion Won, Year's Highest

- Key Summary: Forced liquidations against unsettled brokerage receivables totaled 707.7 billion won in May, the largest monthly figure this year. Forced liquidations were concentrated on May 18-20, when the KOSPI fell to 7,493.18 after breaking through the 8,000 level, with 145.8 billion won in forced liquidations on May 20 alone. This was the largest scale since the Youngpoong Paper trading suspension in October 2023. As of the previous day, the credit trading loan balance stood at 37.6811 trillion won, up 5.5% from the end of April, increasing potential liquidation pressure.

2. "Too Wasteful to Leave Like a Deposit"…Retirement Pensions Now Directly Managed Through ETFs

- Key Summary: With retirement pension reserves reaching 501.4 trillion won, surpassing 500 trillion won for the first time ever, ETF investments grew to 48.7 trillion won, accounting for 40% of performance-based dividend assets and more than doubling for three consecutive years. The DB-type share fell sharply from 49.7% in 2024 to 43.6% in the first quarter of this year, while the IRP share expanded from 22.9% to 28.3% over the same period. The deferred dividend income tax effect when investing in overseas index ETFs and a long-term compounding strategy utilizing low management fees are driving demand for conversion to DC and IRP types. The in-kind transfer system introduced in 2024, which allows investors to switch financial companies without selling existing products, is further fueling demand for active asset management.

3. Authorities Seek Revitalization Measures for Sidelined KOSDAQ

- Key Summary: The Financial Services Commission (FSC) summoned officials from securities firms to discuss emergency revitalization measures for the KOSDAQ market, which has fallen noticeably behind the KOSPI. While the KOSPI's gain this year reached 109%, the KOSDAQ has risen only 11%, leaving a stark gap. According to a Samsung Securities (016360.KS) report, the KOSDAQ's 12-month forward PER stands at 27.4 times, far above the 10-year average of 17 times, suggesting the overall investment appeal of the KOSDAQ index is limited and that a stock-by-stock differentiated market will unfold. An official from the authorities also noted, "For supply-demand policy effects to expand, earnings improvement at KOSDAQ companies needs to accompany them."

4. "Market Underestimates Semiconductor Cycle"…Goldman Sachs Raises KOSPI Target to 12,000

- Key Summary: Goldman Sachs raised its 12-month KOSPI target to 12,000 points, suggesting roughly 37% additional upside from current levels. The report stated that as computing demand grows faster than memory supply, memory makers' pricing power has strengthened, and it is confident that this semiconductor cycle will last longer than past cycles. The 2026 earnings growth forecast for KOSPI companies excluding Samsung Electronics (005930.KS) and SK hynix (000660.KS) was also raised from 20% in January to 57% currently. However, with the two stocks accounting for more than 50% of the KOSPI's market capitalization, volatility could increase in the event of a short-term correction, which was cited as a risk factor.

5. Samsung-Hynix Leverage ETFs Become 'Stock Market Black Hole'…Warning Lights on Premium and Concentration in Major Issuers

- Key Summary: Daily trading volume in 14 single-stock leverage ETFs tracking Samsung Electronics and SK hynix reached 10.9745 trillion won, 1.7 times the total of all existing domestic leverage ETFs (6.23 trillion won). Funds are concentrated in the two major issuers KODEX and TIGER, with only one product from other issuers exceeding 100 billion won in market cap. Amid liquidity shortages in smaller ETFs, premiums have widened, with the RISE Samsung Electronics Single Stock Leverage and PLUS Samsung Electronics Single Stock Leverage premiums reaching 2.36% and 2.15%, respectively. Even if investors correctly predict the direction of the underlying asset, losses can occur due to premiums, and selling at desired prices may be difficult, requiring particular caution.

6. KOSPI Soared but Securities Stocks Slid Back…First Decoupling This Year

- Key Summary: While the KOSPI rose 28.45% in May, the KRX Securities Index fell 4.34%, marking the first time this year the two indices moved in opposite directions. Most major securities stocks recorded double-digit declines over the same period, including Mirae Asset Securities (006800.KS) (-12.3%), Samsung Securities (-13.1%), and NH Investment & Securities (005940.KS) (-17.1%). Analysts say semiconductor-centered fund concentration limited supply-demand expansion, and that share prices already peaked in the first quarter as annual earnings expectations were front-loaded. The view is that investors considering securities stocks should examine both the high-first-half-low-second-half earnings cycle pattern and whether the semiconductor rally will continue.