Debt-financed retail stock investment hit yearly-high of 7.8 trillion won ($7 billion) as investors dug into low interest rate debt market to ride on recent stock rally.

According to Korea Financial Investment Association and Seoul-based market data provider FnGuide on Friday, the volume of leveraged stock trading in the main Korean Composite Stock Price Index (Kospi) and the secondary Korea Securities Dealers Automated Quotations (Kosdaq) markets registered 7.8 trillion won, hitting a fresh high for this year, on Wednesday. The leveraged stock trading refers to purchasing securities on loans from brokerages with an expectation for the stock price to rise.

The upward trend in leveraged stock trading volume is driven by Kosdaq market. While the debt balance stayed between 3.2 trillion won and 3.3 trillion won for Kospi stock trading, the leveraged stock trading volume in Kosdaq bourse surged to 4.4 trillion won from 3.7 trillion won early June.

On July 18, the Kosdaq’s debt-financed trade hit all-time high record of 4.1 trillion won, beyond last year levels of borrowed stock investment surging upon boom in pharmaceutical and cosmetics shares.

As of Wednesday, YoungWoo DSP Co. topped the list of highest leveraged stock trading ratio, or the share of number of circulating shares invested through debt, with 15.6 percent followed by People & Technology Inc. with 13.2 percent, and SM Core Inc. with 12.3 percent. YMC Co. and Nexturn Co. also showed comparably high leveraged stock trading ratio or 12.3 percent and 11.2 percent, respectively.

Among the Kospi-listed firms, Seondo Electric and Automobile & PCB Inc. displayed high leveraged stock trading ratio with 10.1 percent and 9.7 percent each followed by Yuyang D&U Co. with 8.4 percent, Kyungin Synthetic Co. with 8.2 percent, and Dong Yang Co. with 8.0 percent.

By Kim Tae-joon

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