Liquidation rates in Korean equities remain six to eight times above stable market levels, signaling prolonged deleveraging pressure.
South Korean equities may see further forced selling as deleveraging pressures persist, with liquidation rates running six to eight times higher than stable market levels. A sharp drop in brokerage margin balances indicates the unwind is incomplete, potentially sustaining elevated volatility and dampening sentiment in the near term.
The stabilisation fund’s limited size and moral hazard risks tied to National Pension Service intervention restrict policymakers’ ability to mitigate downside risks. Retail-heavy segments remain particularly vulnerable, with daily margin and liquidation data serving as key indicators for the unwind’s progression.
Investors with exposure to Korean equities are advised to monitor these metrics closely as the deleveraging cycle continues.