Margin Calls Surge as KOSPI Wobbles; Deposits Fall Below 110 Trillion Won

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an 'AI-based customized news recommendation and summarization service' developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. Aftermath of 'Debt Investing' as KOSPI Corrects; Margin Calls in 50 Billion Won Range for Second Day

- Key Summary: As the KOSPI's correction continues, the scale of individual investors' forced liquidations has recorded the 50 billion won range for two consecutive days. According to the Korea Financial Investment Association, the scale of margin calls the previous day was 59.6 billion won, the largest since the 10th, and the ratio of margin calls to brokerage receivables soared from 1.1% on the 16th to 5.7% on the 21st, an increase of more than fivefold in five days. As a result, investor deposits, the cash on standby for the stock market, fell to 106.6929 trillion won, down 5.826 trillion won in a single day and more than 30 trillion won from last month's peak. However, the KOSPI closed up 3.56% the previous day despite margin-call volumes early in the session.

2. Wall Street Floats Korea Stock Bottom Theory…"Semiconductor Selloff Will Stop"

- Key Summary: As the KOSPI fell to the 6,000 level, global investment banks including Morgan Stanley, JP Morgan, and UBS unanimously raised a bottom theory. Morgan Stanley maintained its KOSPI target of 9,000 and diagnosed the recent correction as a buying opportunity, while JP Morgan presented a 12-month target of 12,500. According to Meritz Securities, the spot price of 64GB DDR5 DRAM for servers surged up to 146% compared to the fixed transaction price from mid-July, and Supermicro announced that its AI server order backlog had exceeded $60 billion (about 89 trillion won). Meanwhile, Samsung Electronics (005930) closed up 0.58% at 260,500 won that day, and the previous day S&P Global raised its outlook on Samsung Electronics' credit rating from 'stable' to 'positive.'

3. MSCI August Review Takes Shape…LG Innotek In, HLB and 3 Others Expected Out

- Key Summary: In the MSCI August regular review to be announced on the 13th of next month, the likelihood of LG Innotek being added is cited as the strongest. Samsung Securities (016360) assessed the probability of inclusion at 100% and estimated passive fund inflows of about 313 billion won, while LG Innotek's stock price recorded 647,000 won, up 29.4% from three months earlier. In contrast, HLB and LG Display (034220) were classified as highly likely to be removed on a market capitalization basis, and POSCO International and Samsung Epis Holdings (0126Z0) on a free-float market capitalization basis. In addition, the timing for reflecting SK hynix's (000660) American Depositary Receipts (ADRs), recently listed on the Nasdaq, in the index is emerging as a point of interest.

4. Direct Hit from China Oversupply…Petrochemical Industry Credit Ratings Cut Across the Board

- Key Summary: As oversupply originating from China and worsening profitability drag on, the credit ratings of domestic petrochemical companies are falling one after another. In this year's first-half regular assessment, three domestic credit rating agencies lowered the credit ratings or long-term outlooks of five petrochemical companies, including LG Chem (051910), Lotte Chemical (011170), and Kumho Petrochemical (011780). With new capacity expansions of about 28 million tons of ethylene and about 18 million tons of propylene planned for 2026-2028, observers expect it will be difficult to improve supply and demand in the short term. Meanwhile, the government is pushing a restructuring of the Daesan and Yeosu industrial complexes, and Hana Securities estimated that Lotte Chemical's debt ratio would fall from 76.0% to 52.8%.

5. "Automatic Profit-Taking Is the Force That Sustains Long-Term Investing…Covered Calls in Focus in Volatile Markets"

- Key Summary: Amid growing stock market volatility, covered call exchange-traded funds (ETFs), which provide psychological stability through monthly distributions, are drawing attention as a strategy for securing cash flow. Lee Jung-hwan, head of the Strategic ETF Management Division at Mirae Asset Global Investments, explained that covered calls are structured to realize some profit each month through option premiums, helping investors sustain long-term investing like an automatic profit-taking system. Recently, product structures have evolved into '2.5-generation covered calls' that reduce the proportion of option selling to raise participation in upside, and inflows from young investors in their 20s to 40s have also increased. However, he explained that the 'mismatch' structure, in which the underlying asset and the sold option do not match, can lead to principal erosion and requires caution.

6. 3.4 Trillion Won in Net Buying Over 3 Trading Days…Is Foreign Rebalancing Over?

- Key Summary: Foreigners engaged in bargain buying centered on semiconductor stocks that had corrected sharply recently, continuing net buying in the stock market for three consecutive trading days. According to the Korea Exchange, foreigners net bought 2.6223 trillion won on the 22nd alone, and over the past three trading days they concentrated purchases on SK hynix (1.4336 trillion won) and Samsung Electronics (1.377 trillion won). However, foreigners have net sold 157.7434 trillion won so far this year, and on a monthly basis a selling bias (9.3275 trillion won) still continues, so some interpret it as too early to view this as a trend return. The KOSPI closed up 0.74% at 6,797.70 that day, and the won-dollar exchange rate fell to 1,473.4 won, marking a sixth consecutive trading day of decline.