[비즈한국] The Lee Jae-myung administration defines wealth accumulation from rising real estate prices as unearned income and is focusing on shifting capital invested in real estate into the stock market. This policy direction of moving real estate funds to the stock market has been emphasized multiple times by the President himself. However, as the KOSPI index continues to experience sharp fluctuations, critics point out that the stock market is becoming a venue for speculation—another form of unearned income—rather than the capital market hub for corporate growth that the President intended to foster.
In particular, as retail investors, gripped by FOMO (Fear of Missing Out), have heavily jumped into "debt-financed investment," the number of those suffering losses from forced stock liquidations (forced sales) by securities firms during stock price crashes is rising sharply. In June alone, the value of these forced sales exceeded 1 trillion won, causing the losses of retail investors to snowball. With such volatility continuing into July, an increasing number of "ants" (retail investors) who entered the market are shedding tears.
On June 1, President Lee shared a media report on X (formerly Twitter) stating that 8 out of 10 real estate tax evasion reports originated in the metropolitan area, writing, "Real estate tax evasion is no longer acceptable," and "We will surely escape from the ruinous republic of real estate unearned income." On the 3rd, he identified real estate as "one of the reasons why the South Korean stock market remains undervalued," adding, "South Korea must escape the republic of real estate speculation, make a great transition into a startup nation, and achieve development as an irreplaceable core nation."
The goal is to support companies by inducing funds concentrated in real estate into the stock market. However, the stock market is recently degenerating into a "money-grabbing" speculative market. In particular, after the government allowed single-stock leverage exchange-traded funds (ETFs) for Samsung Electronics and SK Hynix, these leveraged products have been shaking the market and driving its sharp fluctuations. Foreign media outlets, including Bloomberg, have even pointed to Samsung Electronics and SK Hynix leverage ETFs as a cause for dragging down not only the Korean stock market but also U.S. and European markets.
The problem is that this is undermining the very policy foundation of shifting real estate capital into the stock market to support businesses. Because the scale of forced liquidations of stocks held by retail investors—who engaged in debt-financed investment amidst market volatility—is snowballing, trust in the stock market is crumbling. When investors borrow money from securities firms to buy stocks, they are required to maintain a certain ratio (140%) as collateral to prepare for stock price declines. This means that if the stock price drops sharply and the collateral maintenance ratio is not met, the securities firm can forcibly liquidate (force-sell) the pledged stocks. However, with the recent repeated sharp fluctuations, the amount of stocks being force-sold due to failure to meet collateral requirements is surging.
According to the Korea Financial Investment Association, the amount of forced sales (relative to brokerage credit/margin receivables) due to failure to maintain the collateral ratio during the stock price plunge in January this year was 214.274 billion won. In February, it remained in the 200 billion won range at 229.482 billion won, but in March, in the aftermath of the outbreak of the U.S.-Iran war, the forced sale amount relative to brokerage receivables more than doubled to 550.83 billion won. It seemed to drop back to 264.157 billion won in April, but jumped to 707.698 billion won in May as the stock market fluctuated due to an increase in operating profits for Samsung Electronics and SK Hynix, followed by strike risks. In June, as concerns about a "peak out" in semiconductors were raised and market volatility intensified following the launch of Samsung Electronics and SK Hynix leverage ETFs, the forced sale amount relative to brokerage receivables exceeded 1 trillion won, reaching 1.122859 trillion won. Compared to January, the scale of forced sales has grown 5.2 times in just five months.
Furthermore, there were five trading days this year with over 100 billion won in forced sales, and since four of those occurred in June, it was truly a hellish month for retail investors. In particular, following 166.192 billion won in forced sales on Friday, June 5, there were three consecutive trading days with over 100 billion won in forced liquidations: 139.134 billion won on Monday the 8th and 169.796 billion won on the following day, the 9th.