Stock Investment with Borrowed Money Increasing Rapidly
An increasing number of securities companies are putting the brakes on securities-backed loans as stock investment with borrowed money is increasing rapidly.
On Aug. 23, Korea Investment & Securities temporarily stopped providing new loans based on stocks, funds, bonds and ELS. This is because the company reached its credit offering limit.
The same is being witnessed in the insurance sector, too. On Aug. 24, the General Insurance Association of Korea and the Korea Life Insurance Association had a meeting to discuss household debt issues. The South Korean government recently told insurance companies to better control their loans.
In the insurance sector, the outstanding household loans increased 6.5 percent to approximately 125 trillion won from January to July this year whereas the loans fell 0.7 percent in the same period of the preceding year. The rate of increase is higher than the government’s target rate for the financial sector as a whole, which is 5 percent to 6 percent.
Credit card companies are likely to become more meticulous as well. Household loans from credit finance corporations surged from 600 billion won or so to 5.4 trillion won from July last year to July this year.