Institutions snap up 5.2 trillion won in two days — ETF boom is behind it

Institutional investors recorded net purchases of more than 5 trillion won over two trading sessions in the domestic stock market, pushing the Kospi close to the 9,000 level, with the rapid growth of the exchange-traded fund market identified as the key driver.

According to the financial investment industry Monday, combined institutional net purchases on the Korea Exchange and the alternative trading system reached approximately 2.7 trillion won on May 29 and about 2.5 trillion won on June 1, bringing the two-day total to 5.2 trillion won.

The financial investment sector led the buying. It net-purchased 2.2 trillion won on May 29 and 2.6 trillion won on June 1, accounting for 4.8 trillion won over the two sessions — the bulk of total institutional net purchases.

Market participants point to the expansion of the ETF market as the force behind the large-scale institutional buying. When investors pour money into ETFs, liquidity providers and authorized participants must purchase the underlying assets as part of the ETF creation and hedging process.

The resulting spot-market purchases are counted as financial investment sector net buys, inflating the overall institutional net purchase figure. Put simply, as retail and other investors bought ETFs, brokerages bought the component stocks, driving up institutional net purchases.

Investor interest in single-stock leveraged ETFs appears to have been a significant catalyst for the recent ETF market surge. Products tracking Samsung Electronics and SK Hynix in particular drew heavy trading volume and broad market attention.

In the three sessions following the launch of single-stock leveraged ETFs on May 27, the KODEX SK Hynix Single-Stock Leveraged ETF recorded trading volume of 10.9258 trillion won, topping all domestic ETFs. The combined trading volume of all 16 single-stock leveraged and inverse ETF products listed during the same period reached 27.8710 trillion won.

Analysts say short-term trading demand concentrated in these products as a semiconductor sector rally converged with expectations for further AI investment expansion.

The broader ETF market is also growing at a rapid clip. The total market capitalization of domestic ETFs surpassed 500 trillion won on May 27 — roughly 24 years after ETFs were first introduced to the Korean market in October 2002.

The pace of recent growth is particularly striking. After crossing the 400 trillion won mark on April 15, the ETF market added another 100 trillion won in just 42 days to breach 500 trillion won.

Domestic ETF market capitalization crossed 100 trillion won in June 2023, then 200 trillion won in June 2025, and 300 trillion won in early January this year. It has since surpassed both 400 trillion won and 500 trillion won in quick succession, with the growth rate accelerating further. As of June 1, total ETF market capitalization stood at around 517 trillion won.

"The domestic ETF market hit 500 trillion won in assets under management just 42 days after crossing the 400 trillion won threshold," said Lim Eun-hye, a senior research fellow at Samsung Securities. "The 16 single-stock leveraged ETF products launched on May 27 are continuing to drive additional inflows."

"This can be interpreted as the result of an AI-led rally and a broader money shift," she added. "In the week since the single-stock leveraged ETFs launched, combined individual net purchases across the 16 products reached 4 trillion won, with trading volume hitting 28 trillion won."