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Kospi rebound has investors back making record bullish, bearish bets

Published: 17 Apr. 2026, 18:59 Updated: 17 Apr. 2026, 19:26

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing on April 17. [NEWS1]

As the Korean stock market swings sharply, a tug-of-war is intensifying between investors betting on further gains and those bracing for a short-term pullback. Margin trading and short selling — bullish and bearish bets on the market — both climbed to record highs, raising concerns that they could become a two-way trigger for greater volatility.

Outstanding securities lending balances, a leading indicator of short selling, reached a record 162 trillion won ($109.5 billion) as of Thursday, up 2.7 trillion won in a single day, data from the Korea Exchange and the Korea Financial Investment Association showed Friday.

Stock lending allows investors to borrow shares, sell them and buy them back at lower prices if prices fall, pocketing the difference. Net short positions in the Kospi market also hit a record 17.2 trillion won on Tuesday, signaling a rise in bets against the Korean stock market.

On the same day, margin loans climbed to an all-time high of 33.9 trillion won, with those tied with Kospi alone reaching a record 23.4 trillion won. The figure rose by more than 1 trillion won in a week as retail investors piled in, viewing the Kospi’s renewed climb above the 6,000 mark as a signal for a further rally.

The simultaneous surge in those opposing indicators reflects a mix of profit-taking pressure after the Kospi recovered the 6,000 level and lingering external uncertainty.

Cease-fire talks between the United States and Iran continue to face difficulties, with the suspension of sanctions on Iran set to expire on Sunday and a temporary cease-fire agreement due to end on Tuesday. At the same time, easing signals have emerged after U.S. President Donald Trump abruptly announced a 10-day official cease-fire between Israel and Lebanon. Investors appear to be watching the market warily as positive and negative signals collide.

Plumes of smoke and fire rise after debris from an intercepted Iranian drone struck an oil facility, according to authorities, in Fujairah, United Arab Emirates, on March 14. [AP/YONHAP]

Experts warn that this could amplify market volatility.

“If stock prices fall, forced liquidations could deepen losses, while sharp gains could trigger short covering as short sellers rush to buy back borrowed shares, driving prices up abnormally,” Seok Byoung-hoon, an economics professor at Ewha Womans University, said.

Volatility indicators are already flashing warning signs. The Vkospi, the volatility index for the Kospi 200, has climbed above 50, far exceeding the 20 to 30 range seen before the outbreak of the Iran war.

Sidecar orders — a safeguard that temporarily restricts program trading when markets swing sharply — were triggered six times this month, three times on the Kospi, with two buy orders and one sell order, and three times on the Kosdaq, also with two buy orders and one sell order. The sidecar has been activated 17 times through March and April.

As the market increasingly swings on supply and demand rather than corporate earnings or valuations, investors are finding it harder to find the right time for trades.

A person holds a tablet showing a financial chart and points at it with a pen. A laptop in the background displays stock market graphs, while printed financial documents rest on the desk. [SHUTTERSTOCK]

There are also concerns that margin investors could be forced into liquidation if the market turns lower. When the Kospi plunged more than 12 percent last month amid shocks from the Middle East, forced liquidations totaled 82.4 billion won.

“Whether optimistic or pessimistic, higher leverage means higher risk,” Lee Min-hwan, a professor at Inha University’s College of Business Administration, said. “As volatility is inherently unpredictable, investors should stick to the basic principle of investing within their means.”

Meanwhile, the Kospi, which had closed at 6,226.05 the previous day, nearing its all-time high of 6,307.27, fell 34.13 points, or 0.55 percent, to close at 6,191.92 on Friday.

The Kosdaq rose 7.07 points, or 0.61 percent, to 1,170.04. The won weakened 8.9 won against the dollar from the previous session to finish at 1,483.5 won.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY PARK YU-MI [[email protected]]