STOCKS | CICC Says South Korean Stocks Show High Absolute Leverage but Not Extreme Versus Market Value

A China International Capital Corp. (CICC) research note said leverage in South Korea’s stock market is currently about 2x to 5x, with absolute leverage at a historical high. According to Odaily, the report said leverage is not considered extreme when compared with market capitalization across different comparisons. CICC added that market sentiment and liquidity indicators appear somewhat tight but not significantly. Looking ahead, the report said high leverage can amplify volatility and may create liquidity pressure. It said a decline of about 16% to 36% could trigger margin calls, and noted that recent forced liquidation pressure has increased. CICC said the medium- to long-term trend will depend more on fundamentals.