S. Korea eases margin trading rules to stem forced stock sales

South Korea is temporarily relaxing collateral requirements for margin loans, aiming to curb a sharp market selloff that has pushed the KOSPI index below the 5,000-point mark. This measure suspends the mandatory 140% collateral maintenance ratio for three months, granting brokerage firms more flexibility in managing investors' collateral.

The government's decision comes after a review meeting led by Finance Minister Lee Hyoung-il, with representatives from the Financial Services Commission, Financial Supervisory Service, and Bank of Korea. The KOSPI plummeted by up to 8.8% in early trading, hitting a nine-month low, and caused a 20-minute trading halt. Semiconductor leaders Samsung Electronics and SK Hynix were among the biggest losers.

The decline follows significant overnight losses on Wall Street, driven by worries about AI investment returns and potential regulatory hurdles for data-center development, which have unsettled investors. Authorities are prepared to implement additional measures should market volatility worsen.