South Korea's household loan surge fuels market plunge

South Korean banks reported a sharp rise in household borrowing, with total household loans reaching 774.5 trillion won, up 3.7 trillion won from the previous month. Credit‑loan balances grew by 2.2 trillion won, the biggest increase in over five years, while negative‑balance (ma‑tong) accounts added roughly 1 trillion won each day. Analysts link the surge to “debt‑investment” strategies, where retail investors use overdraft facilities to buy equities amid a bullish market.

At the same time, the Korea Composite Stock Price Index (KOSPI) slumped 5.81% to 8,411.21, triggering both a sidecar and a circuit‑breaker. Heavy net selling by foreign investors (4.6 trillion won) and institutions (3.8 trillion won) drove the decline, with large‑cap stocks such as Samsung Electronics falling over 5%. The rapid market drop and the expanding household debt raise concerns about financial stability and upcoming tightening of loan conditions by banks.