margin lending-surge

S. Korea's stock loans on roll set to reach record high

SEOUL, Feb. 14 (Yonhap) -- Local investors are borrowing a large amount in loans to buy local stocks as the country's stock market continues to outperform most, if not all, of its global peers, market data showed Saturday.

The amount of money borrowed to buy stocks, the so-called margin debt, reached 31.31 trillion won (US$21.5 billion) as of Wednesday, slightly down from an all-time high of 31.61 trillion won tallied Feb. 9, according to the data compiled by the Korea Financial Investment Association (KOFIA).

The latest figure marks a 1.6 trillion-won increase from a week earlier, while analysts believe it may continue to rise for some time, possibly reaching a fresh high, as the local stock market is not showing any immediate signs of cooling off.

The country's stock market has been undergoing a stunning run since last year, aided by sound corporate earnings and policy backups.

In line with a bull run on the market, retail investors poured massive investments, with many of them apparently borrowing the money, to buy stocks out of fear of missing out.

The country's benchmark index, the Korea Composite Stock Price Index (KOSPI), spiked more than 75 percent last year and further advanced around 30 percent so far this year.

"Investors' risky appetite has increased sharply this year, which led to a rise in margin debt," said Park Seok-hyun, an analyst at Woori Bank. "But the rise in margin debt can cause an increase in market volatility."

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