High-end Advisory Suggests Clients Hedge Against Potential Pullback in South Korean Stock Market

June 16: ZeroHedge reports Goldman Sachs has advised clients to hedge against a potential pullback in South Korea’s KOSPI index, as local banks take steps to curb debt-fueled stock market frenzy by restricting credit loans and overdrafts. Under regulatory guidance, major South Korean banks—including Hana Bank, KB Kookmin Bank, and Shinhan Bank—are significantly limiting credit loan and overdraft limits to cool the overheated stock market. For example, Hana Bank has capped credit lending for high-income individuals at 100 million Korean won (roughly $65,881) and set overdraft limits at 500 million won; KB Kookmin Bank is implementing similar restrictions starting June 16. These measures target “debt-driven investing” (using borrowed money to speculate on stocks). Banks had already tightened mortgage loans amid rising home prices, and May’s surge in household lending was largely tied to stock market bets. Goldman’s cautious outlook—urging clients to prepare for a potential KOSPI pullback—comes even though the firm has repeatedly raised its KOSPI target price before.