Samsung, SK Hynix leverage ETFs sweep trading volumes as turnover tops 130%

South Korea's exchange-traded fund market is showing signs of overheating as investment money pours into single-stock leverage ETFs tied to Samsung Electronics and SK Hynix.

Short-term trading aimed at capitalizing on volatility has concentrated heavily in these products, pushing all three top spots in daily trading value to leverage ETFs. Some products recorded daily trading values that exceeded their assets under management, sending turnover rates to extraordinary levels.

According to ETF Check data released Friday, the KODEX SK Hynix Single-Stock Leverage ETF topped the rankings by trading value on Thursday with 6.75 trillion won ($4.37 billion). The TIGER SK Hynix Single-Stock Leverage ETF came in second at 3.4 trillion won, and the KODEX Samsung Electronics Single-Stock Leverage ETF ranked third at 2.87 trillion won — meaning all three top spots were swept by so-called Samsung-and-Hynix leverage products.

The scale of the concentration becomes clear when compared with KODEX 200, the country's largest ETF, which recorded just 2.51 trillion won in trading value on the same day. Unlike the typical pattern in which ETFs tracking broad market indexes dominate trading activity, products offering two-times exposure to major semiconductor stocks in effect drove the entire market.

Turnover rates have also reached overheated levels as trading activity far outpaces the size of the underlying assets. The KODEX SK Hynix Single-Stock Leverage ETF had assets under management of around 5.1 trillion won on Thursday, yet its trading value surpassed that figure by a wide margin, pushing the turnover rate above 130%.

An ETF's daily turnover rate is calculated by dividing daily trading value by assets under management. A reading above 100% means the entire product changed hands more than once in a single day.

The overheating appears to have intensified since the Financial Supervisory Service recently flagged concerns, noting that the average turnover rate for single-stock leverage ETFs between May 27 and June 12 stood at around 120%. The current level dwarfs the turnover of Samsung Electronics and SK Hynix common shares — each below 1% — and far exceeds the 30.2% recorded for domestic equity leverage and inverse ETFs.

Market analysts say money chasing short-term gains has been flowing into leverage ETFs as share price volatility has widened, particularly in the semiconductor sector.

Ultra-short-term trading by retail investors jumped sharply as the share prices of SK Hynix and Samsung Electronics swung widely on expectations for AI semiconductors and shifts in foreign investor flows.

The concern is that this concentration of short-term trading could itself amplify volatility in the underlying assets. Leverage ETFs must adjust their exposure daily to deliver twice the underlying asset's return, and as trading volumes grow, the rebalancing process can generate larger buy and sell orders in the underlying assets or related derivatives. Analysts warn this could intensify supply-demand pressure late in each trading session, further amplifying volatility.

Financial regulators are watching the situation closely. The Financial Supervisory Service recently acknowledged concerns about rising market volatility linked to the overheating in single-stock leverage ETF trading and said it would take preemptive steps to manage the risk.

Korea Exchange has also prioritized market stability, deciding to delay the planned listing of individual-stock weekly options. The exchange concluded that introducing individual-stock options on top of an already speculative concentration in single-stock leverage ETFs could push market volatility even higher.

Industry officials say the investment frenzy centered on major semiconductor stocks may persist for now, but caution that leverage products by their nature expose investors far more to short-term volatility than to long-term returns. They add that turnover rates soaring beyond assets under management is a signal of market overheating, making risk management especially important.