The Korean stock market experienced significant forced liquidations as investor deposits fell sharply amid ongoing KOSPI volatility. According to the Korea Financial Investment Association, forced liquidations reached 59.6 billion won on the most recent trading day, marking the highest level since a prior reference date. Investor deposits, a key indicator of market standby funds, declined to 106.69 trillion won, dropping 5.83 trillion won in a single day and falling more than 30 trillion won from the previous month's peak. The surge in forced liquidations occurred as the KOSPI correction phase continued, with the ratio of forced sales to margin debt rising from 1.1% to 5.7% over five days—a more than fivefold increase. Despite the liquidation wave, KOSPI closed up 3.56% in the most recent session, reflecting mixed market sentiment as volatility persists.
Forced Liquidations Reach 59.6 Billion Won as Investor Deposits Drop to 106.69 Trillion Won
The Korea Financial Investment Association reported forced liquidations totaling 59.6 billion won, representing the largest single-day figure since a previous reference point. The ratio of forced sales to margin debt surged from 1.1% to 5.7% over five consecutive trading days, marking a more than fivefold increase. Investor deposits, which serve as standby funds for market participants, fell to 106.69 trillion won, declining 5.83 trillion won in one day. The deposits have decreased by more than 30 trillion won from the previous month's peak level. Despite the forced liquidation pressure during early trading, KOSPI closed up 3.56% in the most recent session.
Morgan Stanley and JP Morgan Issue KOSPI Bottom-Call Analyses
Global investment banks including Morgan Stanley, JP Morgan, and UBS issued analyses suggesting KOSPI had reached a bottom as the index declined to the 6000-level range. Morgan Stanley maintained its KOSPI target of 9000 and characterized the recent correction as a buying opportunity. JP Morgan presented a 12-month target of 12,500 for the index. According to Meritz Securities, spot prices for 64GB DDR5 DRAM used in servers surged up to 146% above fixed transaction prices starting in mid-July. Supermicro disclosed that its AI server order backlog exceeded 60 billion dollars (approximately 89 trillion won). Samsung Electronics closed at 260,500 won, up 0.58%. S&P Global raised Samsung Electronics' credit rating outlook from "stable" to "positive" on the previous trading day.
LG Innotek Expected in MSCI August Review as HLB Faces Potential Deletion
The MSCI August regular review is scheduled for announcement on the 13th of next month, with LG Innotek widely expected to be added to the index. Samsung Securities assessed the probability of LG Innotek's inclusion at 100% and estimated approximately 313 billion won in passive fund inflows. LG Innotek's stock price reached 647,000 won, up 29.4% compared to three months prior. HLB and LG Display were classified as facing potential deletion based on market capitalization criteria, while POSCO International and Samsung Epis Holdings were identified as falling short of free-float market capitalization thresholds. The timing of MSCI's inclusion of SK Hynix American Depositary Receipts (ADR), recently listed on NASDAQ, has also emerged as a point of interest.
Foreign Investors Net Buy 2.62 Trillion Won in Single Session
Foreign investors net purchased 2.62 trillion won in a single trading day on the Korea Exchange, focusing on semiconductor stocks that experienced significant corrections. Over the most recent three trading days, foreign investors net bought 3.4 trillion won, concentrating purchases on SK Hynix (1.43 trillion won) and Samsung Electronics (1.38 trillion won). However, foreign investors have net sold 157.74 trillion won year-to-date and remain in net-selling position on a monthly basis (9.33 trillion won), leading analysts to suggest it is premature to interpret the recent buying as a trend reversal. KOSPI closed at 6797.70, up 0.74%. The won-dollar exchange rate declined to 1473.4 won, marking six consecutive trading days of decline.
FAQ
What happened to investor deposits in the Korean stock market?
Investor deposits fell to 106.69 trillion won, declining 5.83 trillion won in a single day and dropping more than 30 trillion won from the previous month's peak, according to the Korea Financial Investment Association.
Why did global investment banks issue bottom-call analyses on KOSPI?
Morgan Stanley, JP Morgan, and UBS issued analyses suggesting KOSPI reached a bottom as the index declined to the 6000-level range, citing factors including server DDR5 DRAM spot price surges of up to 146% since mid-July and Supermicro's AI server order backlog exceeding 60 billion dollars.
Which stocks are expected to change in the MSCI August review?
LG Innotek is widely expected to be added to the MSCI index with Samsung Securities assessing inclusion probability at 100%, while HLB, LG Display, POSCO International, and Samsung Epis Holdings face potential deletion based on market capitalization and free-float criteria.
