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3 clusters · 17 sources · 3 days · First seen · Last updated

South Korean stock market volatility and regulatory response

Overview

Following the U.S. midterm elections, the South Korean stock market experienced significant volatility. SK Group Chairman Chey Tae-won warned of a “rollercoaster” pattern in the market, attributing fluctuations to excessive global liquidity and reactions to U.S. political outcomes. He noted that Democratic victories in certain U.S. states raised concerns regarding stricter regulations on AI infrastructure, which impacted semiconductor stocks.

In response to a sharp decline in the KOSPI index, which triggered a circuit breaker after falling below the 5,000 level, Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il announced preemptive measures. To prevent a surge in forced liquidations, known as “ban-dae-mae-mae,” the government decided during an emergency meeting to implement a three month exemption of the 140% collateral maintenance requirement for credit loans, effective November 9.

The Financial Supervisory Service (FSS) and the Korea Financial Investment Association confirmed this exemption will run from November 9 to January 31. This allows securities firms to delay demands for additional collateral or postpone forced sales. In response, major firms such as Mirae Asset Securities and NH Investment & Securities are lowering collateral maintenance ratios to 130% for certain domestic stocks, while Kiwoom Securities and Korea Investment & Securities are offering deferrals for forced liquidations.

While officials maintain that South Korea’s economic fundamentals remain strong, critics and industry experts have expressed concern that the measure acts as a temporary emergency fix that may shift the burden of potential losses to securities firms, potentially leading to a massive wave of liquidations if the market fails to recover. Experts also warn of potential risks regarding increased financial instability for firms and the possibility of moral hazard among investors.

Entities

Financial Supervisory Service · South Korea · Bank of Korea · Lee Hyung-il · Seoul National University

Claims

What the coverage asserts, and how many sources carry each claim.

Timeline

  1. [BUSINESS] 8 sources
    South Korean regulators waive credit collateral requirements to curb market volatility

    South Korean regulators are temporarily waiving the 140% credit collateral maintenance requirement for securities firms until January 31 to prevent a wave of forced sales following recent market volatility.

  2. [BUSINESS] 12 sources
    South Korea waives credit loan collateral requirements to stabilize stock market

    South Korea will waive the 140% collateral requirement for credit loans for three months starting November 9 to prevent forced stock liquidations amid global market volatility.

  3. [BUSINESS] 3 sources
    SK Group Chairman Chey Tae-won warns of stock market volatility

    SK Group Chairman Chey Tae-won warns of continued stock market volatility driven by excessive liquidity and AI-related regulatory concerns following U.S. midterm elections.

Sources

biz.heraldcorp.com · english.hani.co.kr · hani.co.kr · imaeil.com · joseilbo.com · m.imaeil.com · m.sportalkorea.com · mbn.mk.co.kr · namdonews.com · newstomato.com · sateconomy.co.kr · seoul.co.kr · sisajournal.com · socialvalue.kr · tfmedia.co.kr · thesegye.com · tokenpost.kr

This summary has been updated 4 times: see revision history