Leverage bets in the South Korean stock market soar to a historic high

Glonghui, June 5th — Retail investors, once the key driving force, are now showing weakened willingness to inject new funds. Data from the Korea Financial Investment Association shows that, as of May 22, account margin balances for securities had dropped to 121 trillion won (approximately $79 billion) from 137 trillion won on May 12. Meanwhile, Korea Financial Investment Association (KFIA) data indicates that as of May 29, margin loan balances reached a record high of 38 trillion won, up from 27.3 trillion won at the end of 2025. Analysts pointed out that simply looking at the growth in margin lending might suggest surging investor interest; however, amid declining retail margins, this growth could point to higher leverage pressure rather than a stronger risk appetite. "The signal is clear: cash buffers are eroding, while active leveraged positions refuse to close." Another test will come next month, when the market widely expects the Bank of Korea to raise interest rates, a move likely to dampen liquidity. The market is highly sensitive to bond yields because current investments are driven by borrowed (leveraged) funds.