About 11.3 per cent of young South Koreans are highly leveraged
The country’s highly competitive labour market plays a major role as people sought fortune by investing borrowed money in stocks or cryptocurrencies. With the latter collapsing, they lost everything. Today almost 20 per cent of cases in bankruptcy court involve under-30s.
Seoul (AsiaNews) – South Korea is by no means an easy country for young people, and not only from a professional point of view, given the presence of a few, large firms willing to pay their employees well and many small and medium-sized companies that do not.
Young South Koreans also face a financial situation that is becoming increasingly precarious, as noted by some South Korean TV series that have highlighted large-scale private debt.
As reported last month by the Bank of Korea, 381,000 households are at risk of financial default due to excessive debt. That represents 3.2 per cent of all households.
According to the central bank, these are people who cannot repay their loans even by selling all their assets.
The number of people for whom the level of debt has reached critical levels is high. Even more so, debt is a daily concern for South Korean 20- and 20-year-olds.
According to the Hankyoreh newspaper, about 11.3 per cent of people in these age groups has debt problems, a situation that often drag on for years, with serious repercussions in terms of socio-economic status.
Young people’s propensity to borrow could be criticised as a form of gambling, but in the South Korean context there are profound factors that push them in this direction, starting with the labour market.
The latter is extremely competitive, with the "losers" ending up in low-paying jobs, amid the working poor. Faced with this situation, many young people have turned to borrowing as a way out.
With loaned capital, they have invested in the stock market and cryptocurrencies, especially in recent years. By the end of 2020, some 319,000 under-30s had secured loans from more than three financial institutions to invest in equities, a number that reached 387,000 last June.
This represents a 21 per cent increase, compared to 5 per cent for other age groups during the same period, indicating that young people believed in debt investing.
This worked between 2020 and 2021 when the stock exchange recorded excellent results and cryptocurrencies continued to gain, but in 2022 these trends were reversed and many young people lost everything.
The Korea Composite Stock Price Index or KOSPI lost about a third of its value compared to the peak in the summer of 2021, hitting mainly twenty- and thirty-year-olds, who make up 41 per cent of KOSPI investors.
Things were worse for those who invested in cryptocurrencies, which saw even larger losses.
According to data from Seoul's bankruptcy court, bankruptcy cases involving twentysomethings have increased rapidly this year, accounting for 19.6 per cent of bankruptcy applications, while in 2020 their share was only 10.7 per cent.
.png)
