Key points
- Residual debt after forced stock sales rose 5.1 times
- Kiwoom Securities holds 54.7% of the total
- 7,251 accounts left with residual debt through July
- Margin loans hit a record 38.6 trillion won in June
Korean investors are leaving behind larger debts when their brokers sell shares to cover what they owe. Residual debt after those forced sales reached 37.8 billion won ($28.1M) in the first seven months of this year, up from about 7.4 billion won ($5.5M) in the same period last year. That's a 5.1-fold increase, and more than half of it sits at one broker, Kiwoom Securities (039490).
The figures come from the Financial Supervisory Service (금융감독원), which supplied them to Park Dae-chul, a People Power Party lawmaker on the National Assembly's National Policy Committee. Seoul Economic Daily (서울경제) reported the data on Sunday. They cover Korea's ten largest brokers by equity capital.
Residual debt is what remains when a forced sale does not raise enough to pay the broker back. One route to it is an unsettled stock purchase. An investor buys shares without paying the full amount, has two business days to settle, and faces a broker sale the following business day if the money doesn't arrive. If the share price has fallen in the meantime, the sale can leave a balance behind.
June alone produced 13.1 billion won ($9.8M) of the seven-month total. Margin-loan balances, a separate measure of borrowing to buy shares, reached a record 38.633 trillion won ($28.7B) on June 24, according to the Korea Financial Investment Association (금융투자협회). The Kospi had reached an intraday high of 9,385.59 five days earlier, before the decline that followed.
Some 7,251 accounts were left with residual debt from January through July, against 3,136 in the same months last year. The seven-month figure is already 2.1 times last year's full-year total of 17.6 billion won ($13.1M).
Why Kiwoom stands out
Kiwoom's share is 20.7 billion won ($15.4M), or 54.7 percent of the total. Mirae Asset Securities (미래에셋증권) is a distant second at 6.1 billion won ($4.6M), and Samsung Securities (삼성증권) is third.
Kiwoom also accounts for nearly half of the brokers' broader unpaid-purchase receivables. That balance is what the ten brokers are owed on stock purchases investors haven't settled, and it reached a record 1.351 trillion won ($1.01B) at the end of July, after the June decline. It's a different and much larger measure than the 37.8 billion won of residual debt, which counts only what was still unpaid once shares had been sold. Kiwoom holds 650 billion won ($483.7M) of the receivables balance.
Kiwoom has led the Korean market in domestic stock trading value for twenty years. Its share was 18.26 percent in 2025 and 18.02 percent in the first quarter of this year, Dailian (데일리안) reported in April. Kiwoom handled about a fifth of domestic trading but accounted for about half of unpaid-purchase receivables and 54.7 percent of residual debt after forced sales. Neither the regulator's data nor the Seoul Economic Daily report explains the difference.
How leverage turns into residual debt
Lee Hyo-seop, a senior research fellow at the Korea Capital Market Institute (자본시장연구원), set out the arithmetic in a report the institute published in late July. His analysis covers margin lending rather than unsettled purchases, so it explains how borrowing amplifies a loss rather than describing the same accounts the regulator counted. Margin buyers in Korea put up a deposit of 45 to 60 percent of the purchase and borrow the rest, the report says.
"If we assume a margin deposit rate of 45 percent, a 30 percent fall in the share price means the investor's actual loss rate reaches 67 percent, which is 2.22 times the 30 percent, and if the price falls 45 percent the investor can lose the entire amount they invested," Lee wrote.
The bigger risk, he wrote, is what the selling does to everyone else.
"When the price falls below the maintenance collateral ratio, forced selling comes out, and that selling accelerates the price decline further, so there is a chance of falling into a vicious cycle where margin trades at lower and lower prices are liquidated one after another," he wrote.
Lee also found that the borrowing has moved. Margin loan balances at the end of June were 5.5 times what they were at the end of 2016. US margin debt grew 2.8 times over the same ten years. And where the Kosdaq accounted for about half the borrowing during the 2020 and 2021 boom, the Kospi now carries 78 percent of it.
"The recent increase in margin lending is centered on large-cap Kospi stocks rather than small and mid-cap Kosdaq names, which suggests that leverage is concentrated in particular sectors with high return volatility, such as semiconductors," he wrote.
Investors who borrowed into that rally are still behind after the rebound.
The quotes from the Korea Capital Market Institute report are translated from Korean. Won figures are converted at 1,343.80 won to the dollar, the Naver Finance rate on September 12, 2026.
