South Korean stocks are the world’s No. 1 cautionary tale about the perils of too much leverage, built up too quickly. There is, however, another market in Asia where brokers are lending large sums of money to their clients, piling up systemic risk.
India has had none of Korea’s AI infrastructure-related exuberance. Its benchmark index has been among the world’s worst performing this year. Yet retail investors are racking up debt to buy at stretched valuations. Fully digital stock purchases have made it simple — perhaps a bit too simple — for investors to access credit and for brokers to push it. Besides, with inflation expectations for the near future at above 9%, it makes little sense for savers to leave money in a deposit account earning 6%.
