黄金時代還是危機紀元？韓國央行加息在即，券商保證金擬提高5倍

Original｜Odaily Planet Daily（@OdailyChina）

Author｜Wenser（@wenser 2010 ）

Who would have thought that the Bank of Korea's interest rate hike might arrive before a new high in the KOSPI index!

According to foreign media reports, sources reveal that the market widely expects the Bank of Korea to raise its key interest rate by 25 basis points to 2.75% at its monetary policy meeting tomorrow; if confirmed, this would be South Korea's first rate hike since January 2023, roughly three and a half years ago. Some bond market experts predict further rate hikes within the year, with the benchmark rate reaching 3.00% by year-end and rising to 3.25% in the first half of next year.

Immediately, despite a strong rebound in the KOSPI index today, this news has triggered some degree of market panic. Additionally, reacting to the sharp volatility in ETFs tracking stocks like SK Hynix and Samsung Electronics, South Korean securities firms plan to raise the minimum deposit requirement for single-stock leveraged ETF investments fivefold.

Exactly one month ago, South Korean girls were celebrating the stock market surge, exclaiming that "the golden age of humanity has arrived"; a month later, is the South Korean market now entering an era of crisis due to liquidity tightening and higher investment barriers?

South Korean Stock Market Faces All-Around Scrutiny: From the President to Brokerages, from the Central Bank to Financial Regulators

The successive sharp surges and crashes in the stock market have driven South Koreans, a people often dubbed "the nation born with leverage," into complete frenzy. On July 13, an incident occurred in Busan where an investment KOL was stabbed by a fan who had become emotionally unstable due to investment losses.

Such frenzied and extreme speculative fervor has sparked widespread attention and heated debate across South Korean society, from President Lee Jae-myung to Financial Investment Association Chairman Hwang Seong-yeop and the CEOs of ten major asset management firms; from the central bank to the central financial regulatory authorities—everyone is focused on "stocks," "securities," and "financial markets."

President Lee Jae-myung: Stock Market Needs Time to Stabilize After Sharp Rise

Today, during a policy meeting with senior government officials in Seoul, South Korean President Lee Jae-myung stated: "The domestic stock market is currently quite unstable. Since the market has experienced such an unprecedented sharp rise in a very short period of time, it needs time and a certain degree of fluctuation to stabilize."

Regarding the controversy surrounding leveraged ETFs, Lee acknowledged its existence and urged the heads of the Financial Supervisory Service and the Korea Exchange to handle related issues promptly and formulate follow-up measures.

Market observers expect regulators to intervene to curb the impact of such high-risk products on market stability, potentially including raising the minimum deposit requirement for investing in leveraged ETFs. The main opposition People Power Party on Tuesday accused the Lee administration of encouraging excessive risk-taking by proposing ambitious stock market goals while neglecting the accumulating risks of leverage.

Previously, influenced by the global AI industry chain and semiconductor boom, the South Korean government had unveiled an "800 trillion won semiconductor factory investment plan" and planned to invest at least 30 trillion won in the chip sector over the next 15 years. Just half a month later, the KOSPI index, including stocks like SK Hynix and Samsung Electronics, experienced consecutive circuit breakers, significantly dimming the "semiconductor glory" that the South Korean government and the nation were once so proud of.

Nevertheless, following market laws, a sharp rise is inevitably followed by a sharp fall. The South Korean government's promotion of domestic industrial development and long-term construction is also expected. However, in the process of construction, who bears the cost and who reaps the rewards will depend on whose performance is better.

South Korean Securities Firms: Proposing to Raise Minimum Deposit for Single-Stock Leveraged ETF Investments

According to a report by The Korea Herald, South Korean securities firms have agreed to tighten investor protection rules for single-stock leveraged ETFs.

This Tuesday (July 14), the Korea Financial Investment Association convened an emergency meeting with CEOs of major securities firms to assess the market conditions for leveraged ETFs tracking Samsung Electronics and SK Hynix and discuss countermeasures. The participating institutions agreed in principle to raise the minimum deposit requirement to curb excessive leverage use by retail investors. One plan under discussion is to raise the minimum deposit threshold from 10 million won (Odaily Planet Daily note: approximately $6,714) to 50 million won (Odaily Planet Daily note: approximately $33,570).

The institutions also agreed to provide more tailored risk warnings based on investor age and portfolio composition, and to enhance investor education to help them better understand the structure and risks of such products. Additionally, the industry agreed to more evenly distribute rebalancing and hedging transactions across the entire trading session to reduce market impact from concentrated buying and selling near the close.

Bank of Korea: Potential 25 Basis Point Rate Hike on Thursday Signals Imminent Tightening Cycle

According to a report by BigGo Finance, sources from the financial sector revealed that the market widely expects the Bank of Korea to raise its benchmark interest rate by 25 basis points, from 2.50% to 2.75%, at its meeting this Thursday. This would be the first rate hike since January 2023, after a gap of about three and a half years, and likely marks the start of a tightening cycle.

Bond market experts predict further rate hikes within the year, with the benchmark rate reaching 3.00% by year-end and rising to 3.25% in the first half of next year, implying that borrowers should prepare for interest rate increases lasting at least one year.

The central bank raising rates is itself a signal to control liquidity in the market. This is because it means—

• Margin loan rates increase, directly raising the cost of borrowing for investments;
• Costs for holding existing leveraged positions surge, potentially forcing investors who used leverage to buy stocks to sell some holdings to obtain liquidity;
• Higher capital costs further transmit to the leveraged trading side, leading to further contraction in new leveraged funds.

During the previous South Korean rate hiking cycle from August 2021 to January 2023, the KOSPI index first rose to near 3000 points before falling to below 2300 points, a decline of almost 25%. In contrast, over the past year, the low point for the KOSPI index was around 3080, while its high point surged to 9385 points, representing an accumulated increase of over 204%. JPMorgan data shows the KOSPI index has outperformed global markets by a wide margin year-to-date, with a 109% gain compared to the S&P 500's 11% rise over the same period.

But as mentioned earlier, the major components of single-stock leveraged ETFs—Samsung Electronics and SK Hynix—together account for approximately 43% to 50% of the KOSPI's weight. This "manic bull run" has never been a genuine broad-based rally; instead, it is a malnourished and false prosperity.

On the other side, retail investors are also feeling pressure from the central bank and their leveraged positions.

Retail Investors Under Pressure: Foreign Investors Sold Over $110 Billion of Assets this Year, Retail Investors Bear the Burden

According to Goldman Sachs data, foreign investors have cumulatively net sold $110 billion of assets in the South Korean financial market this year, over five times the previous high of $22 billion in 2021. They sold $31 billion in June alone, setting a new all-time monthly high.

On the other hand, South Korean retail investors are accelerating their buying: after purchasing 42.4 trillion won in June, retail investors have cumulatively net bought 13.2 trillion won in KOSPI stocks this month. As of July 14, the outstanding balance of credit transactions by retail investors for KOSPI stocks stood at 28 trillion won, having hit an all-time high of 29.8 trillion won on June 24.

Retail investors, who rely heavily on margin trading and leveraged funds, are also facing risks related to funding constraints.

Data released by the Financial Services Commission and the Financial Supervisory Service shows that as of the end of June, the balance of stock loans in the online investment finance industry was 898.3 billion won, an increase of 374.5 billion won compared to the first half of the year. This represents a surge of 71.5% within six months, compared to 351.3 billion won at the end of last year.

In response, the Financial Supervisory Service will issue management targets to online investment finance companies, requiring that the monthly increase in new stock loans not exceed 30% of the increase in related loans from the previous month. This new management measure will take effect immediately on August 16. Additionally, to prevent risk accumulation due to the excessive concentration of stock loan business by online investment finance companies, regulators have stipulated that the stock loan limit for a single borrower should generally not exceed 1 billion won. However, companies can receive an exemption if they manage to keep their month-end stock loan balance from July onwards within the level recorded at the end of June.

In summary, regulators are controlling the leverage levels of retail investors from the source of funds to prevent further fueling of the stock market bubble.

In conclusion, South Korean government agencies are implementing four strategies—"tightening the gate, limiting loans, raising barriers, and reducing enthusiasm"—to address the risks arising from the volatile, structurally imbalanced, and bubble-accelerating stock market.

As for whether the interest rate hike will sound the first whistle for a downward trend in the stock market this year, we still need to observe the market's reaction tomorrow.