Margin account loans hit 10-month high in April as retailers up battery shares

POSCO Holdings Inc. headquarters in Seoul [Photo by Lee Chung-woo]

South Korean individual investors have dumped chips and automobile stocks and purchased nearly 7 trillion won ($5.3 billion) worth of secondary battery-related stocks this year, leading to a rise in borrowing for stock investment in the process.

According to the Korea Financial Investment Association on Friday, the outstanding balance of loans on margin account, which a customer borrows from a brokerage firm for investment, surpassed 20 trillion won for the first time in 10 months in the Kospi and Kosdaq markets as of April 19 after 20.1 trillion won in June last year.

The outstanding balance of loans on margin accounts in the Kosdaq market stood at 10.4 trillion won, higher than that of the Kospi at 9.7 trillion won.

Most of the borrowed funds were invested in battery-related stocks.

According to the Korea Exchange on Friday, retail investors’ favorite stock was POSCO Holdings Inc. They net bought 3.9 trillion won worth of the shares between Jan. 2 and April 20, followed by EcoPro Co. (1.4 trillion won) and EcoPro BM Co. (821.9 billion won).

Five out of the top 10 stocks in the net purchase list were battery-related stocks, including SK innovation Co. (332.5 billion won) and Advanced Nano Products Co. (278.5 billion won).

Chips and automotive stocks, which were previously among the top in the net purchases, on the other hand, witnessed a net selling rally during the same period.

Korean retail investors had net purchased 16.07 trillion won in Samsung Electronics Co. shares last year. This year, however, they net sold 5.61 trillion won in the shares.

Individuals also net sold 737 billion won worth of SK hynix Inc. shares, 1.02 trillion won worth of Hyundai Motor Co. shares, and 1.17 trillion won worth of Kia Corp. shares.

Foreign and institutional investors, in the meantime, expanded their investments in chip stocks.

Offshore investors net bought 7.01 trillion won in Samsung Electronics shares this year. Institutional investors purchased 694.3 billion won in SK hynix shares.