Stock market fever fuels biggest jump in personal borrowing in 5 years

Visitors browse books in the stocks and personal finance section of a major bookstore in Seoul, May 10. Yonhap

With the benchmark KOSPI shattering one record after another, surpassing the 8,400 mark for the first time on Friday, more and more retail investors appear to be borrowing money to chase the market’s blistering rally, industry data showed Sunday.

Outstanding personal credit loans at the country’s five major banks — KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup — totaled 106.99 trillion won ($70.98 billion) as of Thursday. The balance was the highest since November 2023, when it stood at 107.72 trillion won.

It also marked a 2.65 trillion won increase from a month earlier, the largest monthly increase since April 2021, when the KOSPI first broke through the 3,200 level.

Much of the increase came from overdraft credit lines, known locally as “minus accounts,” which allow customers to borrow up to a preapproved limit. Outstanding balances on such facilities reached 41.93 trillion won last Thursday, reflecting funds that have actually been drawn down, rather than just the total credit available to borrowers.

What is particularly notable is the timing. Outstanding balances on overdraft credit lines typically decline around the 25th of each month, when many salaried workers receive their paychecks and use part of their income to pay down debt.

This time, however, balances moved in the opposite direction, rising by roughly 650 billion won from May 21 to May 28.

The unusual pattern suggests that many borrowers opted not to reduce their debt after payday and may instead have drawn additional funds, potentially to increase their exposure to the stock market as fears of missing out on the rally intensified.