Amid a plunge in the domestic stock market, private investors who purchased stocks on loans are suffering losses due to liquidation sales.
According to the Korea Financial Investment Association on Tuesday, the number of liquidation sales has soared this month, reflecting the growing concerns on the upcoming U.S. interest rate hike.
Liquidation sales refer to the sell-off of stocks that a securities company executes in order to make up for the differences, should a credit-purchaser fail to make the due payment on time. These sales usually occur at the bottommost price line, causing financial losses to the stockholder.
Last Friday, the total amount of such liquidation sales was 18.3 billion won ($15.6 million), which was the second highest since 24.9 billion won on March 27 this year. In September-October, the corresponding amount was around 5 billion won on average.
This rising amount of low-price sell-offs, as well as the sudden depreciation of the stock market, is largely attributable to the growing concerns on a U.S. rate hike and the recent terrorist attack in Paris, according to market observers.
(tellme@heraldcorp.com)