[REVISION HISTORY]

South Korean stock market volatility and regulatory response

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2026-11-09 02:57 UTC → 2026-11-09 05:46 UTC · added ~~removed~~

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 ~~and Kiwoom 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.

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