Koreas Crash Wasnt a Sell-Off. It Was a Deadline. [bLc0mqeblnL]
Korea's index fell roughly 40% from its June peak, and most of the selling was not a decision anyone made. Korean investors had borrowed a record 38.6 trillion won from their brokers to buy shares. A margin loan requires collateral worth a set multiple of the loan, typically about 140%. At a common 40% deposit that means a fall of only about 16% trips it. Break that line and you get a day or two to add cash, and if you cannot, the broker sells your shares into the next morning's opening auction at whatever price it clears. This episode works through that mechanism and why it turns a repricing into a crash. Every market with cheap brokerage credit is wired the same way. Sources: - Korea Financial Investment Association, margin loan balance record high 38.6328tn won, 24 June 2026 (Seoul Economic Daily; Financial News, 28 July 2026) - Margin loan balance 27.29tn won at end-2025, up c.10.5tn in six months to the 24 June 2026 record; KOSPI share 29.75tn won at the peak (KOFIA; Seoul Economic Daily, 30 June 2026) - Margin loan balance 33.36tn won on 16 July 2026 and 32.74tn won on 27 July 2026, down 15.4% from the June record (KOFIA, Financial News, 28 July 2026) - Reuters, 'I couldn't breathe': South Korea's frenzied stock trading exposes margin loan risks, 20 July 2026 - Korean margin lending (sinyong yungja): maintenance collateral ratio typically c.140% of the loan balance, set by each broker and variable by stock; forced sale (bandae maemae) executed at the opening auction after the cure window - Korea Exchange daily price limit +/-30% on KOSPI and KOSDAQ, which is what a c.140% maintenance ratio is sized against (84 x 0.7 = 58.8 versus a 60 loan) - KOSPI close 5,663.24 on 29 July 2026, c.40% below the June 2026 all-time high (Trading Economics) #margindebt #forcedliquidation #kospi #leverage #margincall #howmarketswork