South Korean stocks saw their July pullback deepen, with forced deleveraging pressure spreading through the retail market.
Using the KOSPI as the reference, the benchmark closed at 6,820.60 on July 16, down about 19.5% from 8,476.48 at the close on June 30. Against its mid-June high, the decline has now moved past 20%.
Semiconductor heavyweight stocks were the main drag in the downturn. On July 16, Samsung Electronics closed at KRW 255,000, marking a cumulative drop of about 31.9% from its previous high. SK Hynix closed at KRW 1.842 million, down about 38.3% from its earlier peak.
As share prices fell quickly, signs of forced unwinding in leveraged retail positions started to emerge. Data from the Korea Financial Investment Association’s FreeSIS system showed that, based on the measure of actual reverse trades tied to unsettled receivables, South Korean securities firms logged about KRW 512.087 billion in actual reverse trading, or forced liquidation volume, from July 1 to July 15.
The heaviest pressure was concentrated on July 9 and July 10. On July 9 alone, actual reverse trading reached about KRW 142.197 billion, equal to 10.2% of unsettled receivables. On July 10, the figure was still about KRW 81.613 billion. Together, the two sessions accounted for about KRW 223.8 billion, or roughly 44% of the published data for July so far.
By scale, this round of pressure was clearly above the recent norm. For the week of July 6 to July 10, forced selling under the FreeSIS measure came to about KRW 324.095 billion, about 30% above the average weekly level of the previous five weeks. Compared with the low week in mid-June, the size had expanded by roughly five times.
The figures indicate that this was not a scattered adjustment in a few individual names. After the sharp drop in the index, forced liquidation of leveraged funds began to hit in a more concentrated way.