Financial Watchdog Steps In as KOSPI Hits Record Highs Amid Surge in 'Debt Investing'

The KOSPI index has been hitting all-time highs for consecutive days, with the total market capitalization of the domestic stock market surpassing 7,000 trillion won for the first time. Analysts suggest that the rapid rise in the KOSPI, which has exceeded 7,800 for the first time, and the significant gains in large-cap stocks have contributed to the surge in market capitalization.

The practice of 'debt investing,' or investing with borrowed money, has also reportedly increased. As of July 7th, the outstanding balance of personal overdraft accounts at the five major banks stood at 40.5029 trillion won, an increase of 715.2 billion won from April. This represents an increase of approximately 700 billion won in just three business days (excluding the Labor Day holiday and the weekend), which is attributed to individuals borrowing to invest amidst the stock market fervor.

Economic experts point out that investors may find it difficult to withstand market downturns during periods of high volatility, potentially exacerbating losses.

Financial authorities are preparing to issue warnings about investment risks amid the KOSPI's strong performance and intend to step in to manage the situation. They have specifically announced a focused inspection of the margin trading market. While assessing the overall situation as manageable, the authorities aim to secure market stability through preemptive measures.