While the government recently announced its policy to expand short selling opportunities to individual investors, there are concerns that smooth stock lending may not be possible due to restrictions on the credit limit.
According to the financial authorities on the 14th, the Financial Services Commission is considering improving the system in the direction of reducing the amount reflected in credit loans when determining the amount of loans provided by securities companies. This is because in reality it is expected that it will be difficult for individuals to borrow shares from securities companies.
Credit loans are a system in which securities companies lend stocks to individual investors, and individuals use this to sell short. The intention is to diversify the risk of loss caused by stock prices to both sides so that securities firms actively lend stocks to individuals. However, in the financial investment industry, it will be difficult in reality for individuals to borrow stocks from securities companies unless the limit of credit loans is calculated separately from the credit offering. As with the increasing number of credit lenders, the limit on credit loans has been reduced, and as’debt investments’ have increased, securities firms have already run out of their credit limit capacity.
Meanwhile, this month, the average daily trading value of the KOSPI decreased from last January.
According to the Korea Exchange, the average daily trading value of KOSPI on the 1st to 10th was 1.98 trillion won, a 25.0% decrease from 26.5 trillion won last month.
The market cap turnover (the ratio of the transaction value to the market cap) has also decreased. This month’s turnover rate was 0.93% on average per day, the lowest since November last year (0.89%) on a monthly basis.
Usually, the larger the stock price, the larger the volume of the transaction. Considering the decrease in trading value this month, it can be seen that the stock market has entered a phase of decline to some extent.
In addition, it was found that the operating profit of 20 major securities companies reached 8 trillion won due to the stock investment fever that has continued since last year.
According to the Financial Supervisory Service, Mirae Asset Daewoo, NH Investment & Securities, Korea Investment & Securities, Samsung Securities, and 20 domestic securities companies (in the order of equity capital at the end of September 2020) recorded a total of 7,847 trillion won in operating profit for the past year. Net profit is 5,9608 billion won.
Operating profit increased 36.7% from 2019 (5,740 billion won), and net profit increased 25.1% from the previous year (4,762.3 billion won).
By securities company, Mirae Asset Daewoo (1.147 billion won) opened an era of 1 trillion won in operating profit last year, and Kiwoom Securities (954.9 billion won) also reached 1 trillion won.
Reporters Beomsoo Kim and Junyoung Kim [email protected]
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