South Korea’s top five banks have used 85% of the annual household loan quota, and leveraged funds in the stock market face a potential cutoff.

BlockBeats message, July 13. According to a South Korean media report on July 12, the five largest commercial banks in South Korea have already used more than 85% of the annual household loan growth quota in the first half of this year, and two banks have even exceeded the annual cap. Against the backdrop of strict total-quantity control targets set by regulators, banks have almost no room to issue new loans in the second half of the year. The market therefore expects that a credit “cliff” could become real in the second half, and leveraged capital for the stock market that routes via loans may face significant contraction pressure.

The report points out that the two engines driving rapid loan growth are, respectively, the sustained surge in demand for housing mortgage loans and credit loans used directly to enter the stock market. Even though banks tightened their lending pace at the beginning of the year, both types of demand have not shown any significant slowdown, ultimately causing loan balances to keep rising in the first half of the year.

For investors who rely on credit to add leverage to participate in the stock market, external financing channels available in the second half are facing a real tightening.