Leverage buying surges as KOSPI extends rally on Iran peace hopes
KOSPI and Kosdaq are displayed on a screen at the dealing room of Hana Bank’s headquarters in Seoul, Thursday. The benchmark index closed at 6,226.05, up 134.66 points, or 2.21 percent, while the secondary bourse rose 10.54 points, or 0.91 percent, to 1,162.97. Yonhap
KOSPI is staging a strong rebound, shaking off the fallout from the Middle East conflict as optimism grows over potential peace talks between the United States and Iran, analysts said Thursday.
Improving investor sentiment has also fueled a renewed surge in leveraged stock investment, pushing margin loans to fresh record highs.
The country’s benchmark index extended its rally to a third straight session after reclaiming the 6,000 level Tuesday for the first time since March 3.
The index opened at 6,149.49, up 58.10 points, or 0.95 percent, from the previous session, and continued to climb, closing above the 6,200 mark at 6,226.05, up 134.66 points, or 2.21 percent.
The move marks the first time the index has revisited the 6,200 range since Feb. 27, just ahead of the outbreak of the U.S.-Iran conflict.
The tech-heavy Kosdaq also got off to a strong start, opening at 1,163, up 10.57 points, or 0.91 percent, and closed at 1,162.97, up 10.54 points, or 0.91 percent.
The rally was attributed to a combination of factors, including a series of media reports indicating progress in peace negotiations and rising expectations for upcoming earnings announcements from major technology firms.
As the market rebounds, retail investors are increasingly turning to leverage. Data from the Korea Financial Investment Association showed that margin loans tied to KOSPI-listed stocks reached a record 23.04 trillion won ($16 billion) as of Tuesday, marking a new all-time high.
The increase has been rapid, with the balance climbing by about 500 billion won in the week since April 8, when it stood at 22.57 trillion won.
Combined margin debt across both the KOSPI and Kosdaq has climbed to 33.28 trillion won, approaching the all-time high of 33.7 trillion won recorded on March 5.
Market experts, however, cautioned against excessive optimism, warning that elevated leverage heightens the risk of forced liquidation if volatility returns. In such a scenario, losses for individual investors could escalate quickly.
“Although hopes for an end to the conflict are supporting sentiment, external uncertainties, including ongoing geopolitical noise tied to Trump, remain,” said Lim Jung-eun, a researcher at KB Securities. “Market direction will hinge on whether corporate earnings momentum materializes as the season unfolds.”
Noh Dong-kil, a researcher at Shinhan Securities, added, “The ceasefire remains fragile, and the Strait of Hormuz is still effectively blocked. As the ceasefire deadline approaches, risk premiums could rise again.”
In the Seoul foreign exchange market, meanwhile, the won also opened stronger at 1,473.6 won per dollar, up 0.6 won from the previous session, supported by improving risk sentiment. It later pared gains and weakened toward the end of the session, closing onshore trading at 1,474.6 won per dollar, down 0.4 won from the previous session.
Global oil prices showed little movement. Brent crude for June delivery settled at $94.93 per barrel, up 0.1 percent, while West Texas Intermediate for May delivery edged up by just 1 cent to $91.29, reflecting a pause in recent volatility.