Golden Age VS Crisis Era? Bank of Korea Set to Hike Rates, Brokerage Margin Requirements May Increase 5-Fold
South Korea's financial authorities are taking coordinated action to cool an overheated and volatile stock market. The Bank of Korea is widely expected to raise its benchmark interest rate by 25 basis points to 2.75% on Thursday, which would be its first hike in approximately three and a half years since January 2023. Analysts predict further increases, potentially bringing the rate to 3.00% by year-end. This move aims to tighten market liquidity, raising costs for leveraged investments.
Concurrently, major Korean brokerages have agreed to raise the minimum investment requirement for single-stock leveraged ETFs fivefold, from 10 million won to 50 million won, to curb excessive retail speculation. This follows extreme market swings focused on major chip stocks like Samsung Electronics and SK Hynix, which together account for nearly half of the KOSPI index's weight. The index itself has seen a dramatic 204% surge from its recent low.
President Yoon Suk Yeol acknowledged market instability and urged regulators to address risks from leveraged products. Meanwhile, financial watchdogs are imposing new limits on stock-backed loans to individual investors to prevent bubble formation. These measures come as foreign investors have been massive net sellers this year, offloading a record $110 billion in assets, while domestic retail investors, using significant leverage, have been the primary buyers, absorbing the sales pressure. The government's multi-pronged strategy seeks to stabilize the market by restricting leverage, raising barriers, and tightening monetary policy.
Odaily星球日报07/15 09:28
