Korean retail investors chase gains with leveraged bets

Korean retail investors, known as the so-called Donghak Ants, are increasingly turning to leveraged investing, borrowing money to buy stocks to maximize returns. The aggressive trend has drawn attention and concern from financial regulators.

According to data from the Financial Supervisory Service, the balance of investor credit loans reached 25.7 trillion won at the end of October, up 2.1 trillion won from the previous month. This marks the highest level since the peak of the retail investing boom in early 2021.

The surge in borrowing reflects renewed enthusiasm among individual investors following a rebound in the benchmark Kospi. Analysts warn, however, that a rise in leveraged positions could amplify market volatility if stock prices fall sharply.

“Many retail investors are once again engaging in all-in investing, hoping to recapture gains seen during the pandemic-era rally,” said an analyst at a Seoul-based securities firm. “The problem is that excessive leverage can quickly turn profits into heavy losses when the market turns.”

Some brokerage houses have loosened margin lending standards, fueling concerns that the pace of retail borrowing could accelerate further. Financial authorities said they are closely monitoring the situation and may take action if household debt risks rise.

Experts said retail investors need to pay greater attention to risk management, emphasizing that even small market fluctuations can lead to significant losses when investments are heavily leveraged.