Kiwoom accounts for 54.7 percent of what Korean investors still owe after forced sales

Set the seven-month shortfall against the peak in margin loans outstanding and the ratio is 0.098 percent ^[1][6][1]. That is about one won of shortfall for every thousand won of margin lending in the market.

The 5.1-fold jump splits into two smaller multiples. Accounts recording unpaid principal rose 2.3 times, and the average shortfall per account went from about 2.38 million won to about 5.21 million won, a rise of roughly 2.2 times ^[3][7][2][3]. Multiply 2.3 by 2.2 and you are back at 5.1 ^[10].

Unpaid principal is what an investor still owes after shares bought with a brokerage's money are sold into a falling market and the proceeds come up short ^[4]. Seoul Economic Daily reported that the totals add up every amount recorded immediately after a forced sale. The debt actually outstanding falls later when investors put in more cash or brokerages recover the claims ^[5]. The data released on the 7th ranks the ten firms by equity capital without giving those capital figures ^[2].

Kiwoom Securities carried 20.68504 billion won of the unpaid principal, Mirae Asset Securities 6.12047 billion won and Samsung Securities 4.82509 billion won ^[8]. Kiwoom held 650 billion won of the 1.351 trillion won in unsettled purchase balances at the end of July, or 48.1 percent ^[9][10][4]. Mirae Asset had 185 billion won and Korea Investment & Securities 183.5 billion won ^[10]. So Kiwoom's share of the shortfalls sits 6.6 points above its share of the balances that generate them ^[5].

Unpaid principal fell from 5.50132 billion won in January to 1.99621 billion won in April and 2.48552 billion won in May, then reached 13.11467 billion won in June, 5.3 times the May figure ^[11][6]. July's 8.8164 billion won brought the two months to 58 percent of the seven-month total ^[11][7]. Seoul Economic Daily, citing analysts, attributed the June jump to large-scale forced selling as the market corrected sharply over a short period ^[13].

These figures measure what investors owed at the moment of sale ^[5]. A brokerage loss appears only in the part it cannot recover. In my view the exposure worth sizing is the unsettled purchase balance, which can itself trigger forced sales: 1.351 trillion won at the end of July is 36 times the entire seven-month shortfall, and July's shortfall was 0.65 percent of it ^{[9][14][8][9]}.

I'd expect the shortfall ratio to track the speed of a fall more closely than the size of the borrowing, so a deeper drawdown could print a much worse month on the same balance. And retail investors have shown little sign of scaling back leveraged bets after the forced sales, according to Seoul Economic Daily ^[15], which also reported warnings that forced sales and unpaid debt could rise together if prices swing sharply again ^[16]. What would change my view is a month in which unpaid principal runs above one percent of the unsettled balance, or a brokerage disclosing a provision against these claims.