Asian margin debt across South Korea, China, and Taiwan has collapsed by $67 billion combined, with leveraged ETFs losing $7 billion in assets, signaling rapid deleveraging and potential volatility spillover.
Macro & Markets ·
Margin debt across South Korea, China, and Taiwan has contracted sharply in recent weeks, signaling a rapid unwinding of leverage in Asian equities markets. South Korea's margin debt fell $4 billion to $22 billion—its lowest level since mid-April—while Chinese stock margin loans dropped $59 billion to $385 billion, matching lows from early April. Taiwan's margin positions declined by $4 billion to $15 billion, also near their mid-May floor. Across the three markets combined, margin debt has contracted by $67 billion from recent peaks.
The deleveraging extends to structured products tied to individual stocks. South Korea-listed leveraged ETFs tracking SK Hynix and Samsung have shed $7 billion in assets since June, representing a 63 percent decline that leaves them at $4 billion in total assets under management. This rapid reduction in borrowed positions and leveraged exposure reflects either forced liquidations or voluntary de-risking by investors.
The timing and magnitude of these withdrawals raises questions about whether further margin calls or broader market stress could accelerate the process. It remains unclear whether the decline has stabilized or if additional waves of deleveraging are likely to follow.