Single-stock leveraged exchange-traded funds tracking Samsung Electronics and SK Hynix — the first of their kind listed on a domestic exchange — have lost more than 40% since their late-May debut, with retail investors pouring more than 13 trillion won ($8.63 billion) into the 16 related products.
Despite the massive inflows, most of the products have posted double-digit losses, leaving investors with unavoidable damage. Analysts say the addition of single-stock leverage ETFs on Samsung Electronics and SK Hynix has amplified volatility in a market already heavily dependent on semiconductors.
According to Korea Exchange, from their first trading day on May 27 through July 10, most of the 16 single-stock leveraged and inverse ETFs recorded declines exceeding 20%, based on closing prices.
The steepest decline belonged to SOL SK Hynix Futures Single-Stock Inverse 2X, which fell 43.38% over the period. Its closing price dropped from 16,265 won on the first day of trading to 9,210 won by July 10.
TIGER Samsung Electronics Single-Stock Leverage fell 25.83% and KODEX Samsung Electronics Single-Stock Leverage dropped 25.54%. SK Hynix leverage products also suffered steep losses — TIGER fell 22.14% and KODEX declined 21.66% — with most products down more than 20%.
The mounting losses stem from the structural nature of leveraged ETFs. Because these products aim to deliver twice the daily return of the underlying asset, losses compound when the share price oscillates rather than moving steadily in one direction. SK Hynix fell 12.47% on June 23, then surged 13.06% two days later. Although the stock's net price change between June 23 and June 25 was just minus 0.068%, KODEX SK Hynix Single-Stock Leverage fell 5.03% over the same stretch.
What makes the situation more alarming is the volume of money flowing into products that are losing value. KODEX SK Hynix Single-Stock Leverage ranked first among all ETFs in trading value from its listing through July 10, with an average daily trading value of about 4.2 trillion won. TIGER SK Hynix Single-Stock Leverage came in fourth at about 2.21 trillion won, followed by KODEX Samsung Electronics Single-Stock Leverage at about 2.07 trillion won and SOL SK Hynix Futures Single-Stock Inverse 2X at about 1.47 trillion won. Trading value — calculated by multiplying the number of shares transacted by their price — reflects the strong market interest these products have attracted.
The concentration of retail money is even more striking. Retail investors' combined net purchases across the 16 single-stock leverage ETFs totaled about 13.82 trillion won since listing. That figure represents 17.98% of the 76.82 trillion won in total retail net purchases on the Kospi — including ETFs, ETNs and equity-linked warrants — over the same period. By contrast, retail investors were net sellers of 2.44 trillion won on the Kosdaq during the same stretch, suggesting that individual money has been flowing out of the Kosdaq and into single-stock leverage products.
The launch of single-stock leverage ETFs has also deepened the grip that Samsung Electronics and SK Hynix hold over the domestic market. The day before listing, on May 26, the two companies — including Samsung's preferred shares — accounted for 51.06% of the Kospi's total market cap. By July 10, that share had expanded to 55.17%. Their combined share of domestic market trading value also climbed from around 30% to 44% as of July 8.
Critics say the single-stock leverage ETFs have poured fuel on a market already heavily concentrated in Samsung Electronics and SK Hynix. Park Woo-yeol, a researcher at Shinhan Investment, said that while hundreds of leveraged products trade in the United States — where the single-stock leverage ETF market is well developed — even Nvidia, the largest stock by market cap, held only a 2 to 3 percent index weighting when its leverage ETFs launched and stands at around 8 percent today. "By contrast, Samsung Electronics and SK Hynix together account for about 65% of the Kospi 200 and nearly half of the MSCI Korea ETF listed in the United States," he said. "That means any volatility in a single stock has a proportionally far greater impact on the broader index."
jiyun@heraldcorp.com
moon@heraldcorp.com
