SEOUL, May 7 (Korea Bizwire) — Investments in stocks carried out using funds loaned to individuals have reached a new record high, according to the Korea Financial Association, which announced yesterday that the balance of loans on margin accounts stood at 1.2 trillion won as of May 3, the highest value ever recorded.
The loans reached a record low on February 2 at 1.09 trillion won before rising to surpass 1.2 trillion won for the first time on April 19. After reaching another record high on April 30, yet another record high was set four days later on May 3.
The stock categories that saw a rise in investment within the month were mostly related to inter-Korea economic corporation. Stocks of pharmaceuticals and biomedicine companies were also popular.
The companies that were most popular among those borrowing to invest included Samsung Electronics, Hyundai Elevator, Celltrion and Samsung Biologics.
However, experts warn that a surge in loans for certain stocks does not necessarily gurantee high performance.
“People think that since many others are taking loans to buy certain stocks, there’s a high chance that the stock prices of those firms will rise, but this is hard to predict,” said researcher Choi Chang-gyu at NH Investment and Securities, who went on to say that there had been a considerable increase loans used to buy stocks relating to South-North economic cooperation and biomedicine.
Choi Yu-jun at Shinhan Investment Corps also warned of loans taken out to make investments, stating that “stocks bought with loans may be programmed to be sold automatically when stock prices begin to fall,” adding to the volatility of stock prices.
Kevin Lee (email@example.com)