'Fear of missing out' pushes more people into stocks as markets break record highs

gettyimagesbank

Kim Soo-yeon, an office worker in her 30s said she recently took out a margin loan to buy more large-cap stocks.

“I started investing with savings, but once I saw how fast prices were moving, I felt like cash alone wasn’t enough,” she said.

She said her colleagues talk about stocks every day at lunch.

“When Hyundai Motor jumped again, I thought, if I don’t get in now, I’ll never catch up. I know borrowing is dangerous, but watching others make money fast makes me feel like I’m the only one missing out.”

A margin loan refers to borrowing money from a brokerage using existing shares as collateral. A margin call occurs when a brokerage demands additional funds or securities after share prices fall.

If investors fail to meet those calls, brokerages can liquidate the shares in the account, often selling them at the lowest price in the following session.

Similarly, Lee Joon-suh, an office worker in his 30s, said he began investing last year after watching friends share their gains on social media accounts.

“I don’t have much seed money,” he said. “So the only way for people like me to grow my assets is through leveraged investment.”

He said he was initially hesitant about taking out loans but decided he shouldn’t wait any longer as the market continued to break records.

“The only regret I have is that I didn’t start sooner.”

These are many among Koreans increasingly turning to equity markets, driven by a fear of missing out.

The market has continued to break records almost daily over the past few months, pulling more retail investors into equities with a sharp rise in leveraged investing.

According to the Korea Financial Investment Association (KOFIA), the country’s margin loans exceeded 30.09 trillion won ($20 billion) as of Thursday.

This was the first time the figure has topped 30 trillion won.

KOSPI margin loans climbed to a record 19.59 trillion won Saturday. Tech-heavy Kosdaq margin loans rose to 10.57 trillion won, the highest level in nearly four years.

The number of “active” stock trading accounts also jumped to exceed 100 million for the first time, reaching 100.02 million as of Thursday.

This is up about 1.73 million in just one month.

Active accounts are defined as brokerages and savings accounts with at least 100,000 won in balance and have records of at least one trade over the past six months.

Given Korea’s population of about 50 million, this means that Koreans now hold more than two active stock accounts per person on average.

Meanwhile, margin trading has been especially concentrated in large-cap leaders, including Hyundai Motor and SK hynix.

Hyundai Motor margin loans jumped 496 billion won last month, the largest monthly increase after its shares surged more than 68 percent in a month.

SK hynix margin loans rose 475 billion won over the same period.