On November 3, the Korea Exchange put 13 stocks on the investment caution list for "concentrated trading by a few accounts," including K3I. Over the past three days K3I's share price fell 15.89%, and the top 10 accounts made 59.09% of the shares sold in that period.
When "investment caution" shows up next to a stock's name, it feels as if you won't be able to sell tomorrow and must get out right now. But the key point lies elsewhere. In the exchange's official guide, the investment caution stage has no trading restrictions. Measures that tie up your money start at investment warning, and every condition for moving above that is "the price rose sharply in a short period."
- What does investment caution signal?
The market alert system (a system in which the exchange attaches stage-by-stage warnings to stocks suspected of unfair trading) climbs in the order "investment caution → investment warning → investment risk." The official guide describes investment caution as a stage that publicly announces the stock, to stop people from blindly following others' trades and to put anyone trying to move the price on notice.
The investment caution guide contains no measure like paying more cash when you buy or being barred from buying on credit. Think of the "speed enforcement zone" sign on a highway. The sign doesn't stop your car. It only means someone is watching that stretch.
- Why are a dozen stocks designated in a single day?
Because there are several grounds for designation. Concentrated trading by a few accounts, a sharp move in the closing price, a large unfilled buy order at the daily upper limit, top trading volume in a single account, and excessive involvement in online rumors or spam are all grounds for investment caution. None of the criteria involve company earnings or financials. They all look at "who traded, and how."
The few-accounts ground requires four conditions to be met together. The closing price must be up or down 15% or more from three days earlier, the top 10 accounts' buying (selling) share over the past three days must be 40% or more, at least 5 of those 10 accounts must have traded on 2 or more days, and the average daily volume must be 30,000 shares or more. Put simply, if a few accounts pile one way over several days and the price moves a lot, the stock gets flagged. It can happen when the price rises and when it falls. K3I was on the falling side.
- The only path up to investment warning is a "surge"
An investment warning is first preceded by an "pre-notice." The notice criteria include a closing price up 100% or more from three days earlier, 60% or more from five days earlier, or 100% or more from 15 days earlier. There is also a path where repeated cautions pile up, but it requires "caution designation on 5 or more of the last 15 days" together with "a rise of 75% or more from 15 days earlier." If the same surge criteria are met again within 10 days of the notice, the stock becomes an investment warning stock, and this time every required criterion must be met without exception.
All of the warning criteria in the official guide are about rises. Even if caution is attached many times, the stock does not move up to warning unless the price rises sharply. Stocks ranked in the top 100 by market capitalization are excluded entirely from warning notices and designations. On the same day, November 3, SGA Solutions received an investment warning pre-notice along with investment caution.
- What touches my money from warning onward?
To buy an investment warning stock, you must pay a 100% margin deposit (money you must put in your account in advance when placing an order), and you cannot buy it with margin loans (money borrowed from a brokerage). The stock is also not accepted as substitute securities, which are used as collateral when buying other stocks. Whether to lift the warning is considered after 10 days from the designation date.
It means that to buy 10 million won worth, the full 10 million won must already be in your account. It is as if your overdraft limit drops to zero for that one stock. But this buying restriction applies only "when you buy." A trading halt is different. During a warning, if the price is above its level the day before designation and the previous trading day and rises 40% or more over two days, trading is halted for the next trading day, and on that day both buying and selling are blocked.
- Investment risk is when trading stops
If the price keeps rising despite the warning, the stock becomes an investment risk stock. The buying restrictions of the warning stay in place, and trading is halted for one day at the moment of designation. If, after designation, the price stays above the day before designation and the previous trading day for three days in a row, trading is halted for one more trading day. On halted days you can neither buy nor sell.
| Stage | When it applies | What touches my money |
|---|---|---|
| Investment caution | Concentrated trading by a few accounts, sharp closing-price moves, etc. (whether rising or falling) | No trading restrictions in the official guide |
| Investment warning | Surge criteria all met again within 10 days of the pre-notice | 100% margin deposit, no margin-loan buying, substitute securities not accepted, one-day halt after a 40%+ rise over two days |
| Investment risk | Price keeps surging while under warning | Warning restrictions stay + one-day trading halt on the designation day |
- BITPRESS Insight
Dumping a stock in a panic over investment caution is like abandoning your car by the roadside after seeing an enforcement sign. Investment caution tells you only that "a few accounts traded heavily," not that the company has gotten worse. In particular, if caution came as the price was falling, that points in the opposite direction from the steps leading to warning and risk.
The time to look closely is when your stock has risen sharply in a short period and an "investment warning pre-notice" appears. From then on, margin buying and collateral are blocked, and if it rises further, it can lead to a trading halt. The more someone bought on credit, the fewer options they have at this stage.
Investment caution is a mark of "who traded," and your money starts getting tied up only when "how much it rose" crosses the line.
Sources
https://moc.krx.co.kr/contents/SVL/M/03050100/MOC03050100.jsp
https://moc.krx.co.kr/contents/SVL/M/03010100/MOC03010100.jsp
https://moc.krx.co.kr/contents/SVL/M/03020100/MOC03020100.jsp
https://moc.krx.co.kr/contents/SVL/M/03030100/MOC03030100.jsp
https://kind.krx.co.kr/investwarn/investattentwarnrisky.do?method=investattentwarnriskyMain
Glossary
Market alert system — A system under which the Korea Exchange attaches warnings, in the order of investment caution, investment warning and investment risk, to stocks suspected of unfair trading or with abnormal price surges.
Sell (buy) involvement rate — The share of a stock's total selling (or buying) volume over a set period accounted for by specific accounts.
Margin deposit — Money that must be in your account when you place a stock order; at 100%, you must hold the full purchase amount in cash.
MarginLoans — Buying stocks with money borrowed from a brokerage.
Substitute securities — Stocks held in your account that are accepted as margin in place of cash.
BITPRESS articles are information to help your investment decisions, not a recommendation to buy or sell any stock or coin. Investment decisions and their results are your own responsibility.
