In a week marked by shifting regulations and market turbulence, South Korea’s financial and investment landscape has been thrust into the spotlight. On August 19 and 20, 2025, the country witnessed the introduction of strict new regulations targeting borrowers with multiple loans, while at the same time, major corporate players like Hyundai Rotem faced dramatic fluctuations in their share prices. The intersection of these events has left investors and analysts alike debating what the future holds for both the lending sector and the stock market.
According to Asia Economy, the recent surge in interest around small- and medium-sized enterprises (SMEs) from sectors such as defense, shipbuilding, materials, and medical devices has led to a notable wave of initial public offerings (IPOs). This, in turn, has broadened investment opportunities, not only for those seeking quick profits but also for those leveraging financial products to maximize returns. Against this backdrop, a growing number of investors have turned their attention to stock-backed loans, or "stock loans" (스탁론), as a means to seize fleeting opportunities in a volatile market.
The timing of this surge in interest is no coincidence. On August 19, 2025, the government introduced a series of new lending and loan guarantee regulations, targeting individuals with multiple outstanding loans. These measures represent one of the most stringent crackdowns in recent memory on excessive borrowing. The core of the new policy is a cap on the Debt Service Ratio (DSR), with a maximum loan interest rate set at 4%. Borrowers can now access up to the approved loan amount without a guarantor, and up to 40% of the loan may be used for personal purposes without the need for collateral or a joint guarantee. However, the policy also places clear restrictions on using new loans to repay existing debts, a move designed to curb the cycle of over-leveraging that has plagued some corners of the market.
As Asia Economy reports, these changes have had immediate repercussions for investors looking to make the most of market volatility. Products like All New Stock Loan (올뉴스탁론) have emerged to offer flexibility in this new environment. With industry-low interest rates—reportedly as low as 0.4% per month—these stock loans allow investors to buy shares or refinance existing margin loans, regardless of their credit rating. Even those previously hampered by DSR limits can now access these services, and investors trading on alternative exchanges (NXT) are eligible as well. The company behind All New Stock Loan highlights that borrowers can leverage up to four times their own capital, and can switch out of positions threatened by margin calls without the need to sell off assets immediately—an appealing feature in choppy markets.
Meanwhile, Hyundai Rotem, a major player in the defense and rail solutions sectors, has found itself at the center of a different kind of storm. As CBC News details, the company’s stock price has been on a downward trajectory throughout August. On August 19, Hyundai Rotem closed at 174,200 KRW, down 2.63% from the previous day. The stock had previously peaked at 203,000 KRW on August 6 but has since struggled to regain that level, with only one day of gains (1.57%) in the nine trading sessions between August 6 and August 19. The day’s trading saw the price dip as low as 172,800 KRW, before rebounding slightly by the close.
Despite the negative momentum, trading volumes remained robust. On August 19, the company saw 765,318 shares change hands, with foreign investors stepping in to buy 141,983 shares. Individual investors, on the other hand, sold 118,369 shares, while institutional investors offloaded 18,862 shares. The following day, trading volume surged to over 2 million shares, suggesting that the market remains highly engaged with Hyundai Rotem’s prospects.
Yet, not all analysts are bearish. In a report highlighted by The Guru and Investing.com, Japanese investment bank Nomura offered a markedly optimistic outlook for Hyundai Rotem. Analyst Nobuhiro set a target price of 260,000 KRW, representing more than a 30% upside from the August 20 closing price. Compared to the previous day’s close of 174,200 KRW, this target implies a premium of nearly 50%—a bold call in the face of recent declines.
Nomura’s bullishness is grounded in what it sees as a significant undervaluation of Hyundai Rotem shares relative to the company’s overseas order backlog. "Hyundai Rotem’s stock is undervalued compared to its overseas order pipeline," the report states, noting that the company’s projected price-to-earnings ratio (PER) for the year is 22.8—45.1% lower than major domestic competitors and 33.0% below global peers. The report further points out that, when measured against expected order backlogs, Hyundai Rotem trades at a 28.4% discount to Hanwha Aerospace and a staggering 63.1% discount to Germany’s Rheinmetall, a leading defense firm.
Nomura’s methodology applies a 30.8x multiple to Hyundai Rotem’s expected 12-month earnings per share of 8,289 KRW, resulting in the 260,000 KRW price target. This figure factors in a 10% discount to the global industry average P/E ratio of 34.2, reflecting dilution effects from the company’s rail solutions and eco-plant divisions. The report does, however, caution that there are risks ahead: "Potential downside risks include delays or cancellations of anticipated orders from the Middle East, which could reduce operating profit in 2027, as well as the possibility that new contract volumes may fall short of expectations."
Financially, Hyundai Rotem has posted impressive results. In the second quarter, the company reported consolidated sales of 1.42 trillion KRW and operating profit of 260 billion KRW—up 29.5% and 128.4%, respectively, from the same period last year. Net profit soared by 88% to 189.6 billion KRW. By business segment, defense solutions contributed 1.42 trillion KRW in cumulative sales, rail solutions 930 billion KRW, and eco-plant operations 250 billion KRW. Defense and rail solutions sales jumped 61% and 39% year-on-year, while eco-plant sales declined by 16%. As of the end of the second quarter, Hyundai Rotem’s order backlog stood at 21.64 trillion KRW, up 2.4% from the previous quarter.
For investors, the convergence of new lending regulations and shifting market dynamics presents both opportunities and challenges. The government’s crackdown on excessive borrowing is designed to foster greater financial stability, but it also means that those seeking to capitalize on market swings must adapt quickly—potentially turning to innovative financial products like stock loans. At the same time, companies like Hyundai Rotem, despite short-term volatility, may offer significant long-term value, especially if analysts’ bullish forecasts come to fruition.
As the dust settles from these regulatory and market shifts, one thing is clear: South Korea’s financial markets are entering a period of transformation. Whether this will ultimately benefit investors or introduce new risks remains to be seen, but for now, all eyes are on the evolving rules and the companies navigating them.
