Leveraged exchange-traded funds tracking Samsung Electronics and SK Hynix absorbed over 7.3 trillion won from mid-last month to the 15th of this month, according to Korea Exchange data released on the 17th. The inflows occurred despite sharp declines in the underlying stocks—SK Hynix fell 19.49% and Samsung Electronics dropped 24.33% during the same period. Individual investors accounted for the majority of purchases, with net buying of 4.2386 trillion won in SK Hynix leveraged products and 1.6119 trillion won in Samsung products, far exceeding foreign investor purchases. Financial authorities responded on the 16th by announcing stricter investment requirements to address concerns that single-stock leveraged products amplify market volatility.
Individual Investors Drive Leveraged ETF Purchases
From mid-last month to the 15th of this month, 16 single-stock leveraged products for Samsung Electronics and SK Hynix (including 2 inverse products) recorded total net inflows of 7.3364 trillion won. KODEX SK Hynix Single Stock Leverage attracted 3.4472 trillion won, the largest amount among all ETFs. KODEX Samsung Electronics Single Stock Leverage received 1.5083 trillion won, and TIGER SK Hynix Single Stock Leverage drew 1.4271 trillion won.
Individual investors net purchased 4.2386 trillion won worth of SK Hynix single-stock leveraged products (7 types) and 1.6119 trillion won worth of Samsung Electronics products (7 types) during the month. These figures substantially exceeded foreign investor net purchases of 859.5 billion won and 724.2 billion won respectively. Institutional investors sold 5.1713 trillion won and 2.2671 trillion won on a net basis.
The two largest products by inflows—KODEX SK Hynix Single Stock Leverage and KODEX Samsung Electronics Single Stock Leverage—declined 45.60% and 48.44% respectively during the period.
Financial Authorities Announce Four Policy Changes
Financial authorities announced measures on the 16th to strengthen investment requirements for single-stock leveraged products. The basic deposit requirement will increase from 10 million won to 30 million won starting the 5th of next month. Securities firms will no longer be permitted to ease deposit requirements after three months based on trading experience, a practice currently common across the industry.
The minimum trading unit will expand from 1 share to 20 shares. This measure targets so-called "small-lot short-term trading" and will take effect in November. Required education hours will increase from 2 hours to 3 hours. Authorities will suspend new listings of single-stock leveraged products until market conditions stabilize. Advertising and marketing of already-listed products will be prohibited.
Market Questions Policy Effectiveness
Market participants expressed doubts about the policy impact. Some observers noted that raising the basic deposit requirement could prompt investors to sell individual stocks and redirect those funds into leveraged products. This shift could reduce demand for other KOSPI stocks and particularly affect KOSDAQ stocks.
FAQ
What are the new investment requirements for single-stock leveraged ETFs starting next month?
Starting the 5th of next month, investors must maintain a basic deposit of 30 million won to trade single-stock leveraged products, up from the current 10 million won requirement. Securities firms will no longer reduce this requirement after three months of trading experience. Required education hours will increase from 2 hours to 3 hours.
How much did individual investors purchase in Samsung and SK Hynix leveraged products over the past month?
Individual investors net purchased 4.2386 trillion won worth of SK Hynix single-stock leveraged products and 1.6119 trillion won worth of Samsung Electronics leveraged products from mid-last month to the 15th of this month. These amounts exceeded foreign investor net purchases of 859.5 billion won and 724.2 billion won respectively.
