South Korea Margin Loans Hit Record $26B, Forced Liquidation Spikes
Margin loans in South Korea have reached a record ~$26 billion, doubling since early 2025, but as a share of free float they are at pandemic lows. The daily forced liquidation ratio recently spiked to 4-5% of total outstanding margin loans, far above the normal ~1%, indicating heightened market stress.
South Korean investors have taken out a record ~$26 billion in margin loans to buy equities, doubling since the start of 2025. However, as a percentage of Korea's free float—the portion of market value available for public trading—the margin debt ratio has fallen to ~0.8%, the lowest since the pandemic low of 2020. This suggests that the surge in overall market capitalization has outpaced the growth in leverage.
During recent market pullbacks, the daily forced liquidation ratio spiked to 4-5% of total outstanding margin loans, well above the ~1% seen under normal conditions. That means brokers liquidated 4-5% of all margin-backed positions in a single day as borrowers failed to meet margin calls. The record level of leverage is exacerbating volatility in South Korean markets.
Source: The Kobeissi Letter