'Did I sell too soon?' Retail investors reverse course with triple-leveraged ETF as semiconductor peak-out fears fade

Korean retail investors who trade overseas stocks have resumed buying triple-leveraged ETFs on US markets, as easing concerns about a semiconductor cycle peak drove a rally in global chip stocks.

According to the Korea Securities Depository's securities information portal SEIBro, Korean retail investors net-purchased $662.85 million worth of SOXL — the Direxion Daily Semiconductors Bull 3X Shares ETF, which tracks the Philadelphia Semiconductor Index at three times leverage — on Wednesday and Thursday.

They bought $544.46 million on Wednesday and an additional $118.39 million on Thursday.

The buying stands in sharp contrast to the heavy selling that preceded it: retail investors offloaded $664.4 million in SOXL on Aug. 3 alone — the first trading day of the month — and net-sold $1.64 billion in the ETF through Tuesday.

The reversal tracks a rebound in the Philadelphia Semiconductor Index, which had fallen to 10,447.49 on July 29 amid concerns about a peak in the semiconductor cycle before climbing back to 12,456.00 on Thursday.

The two-day net purchase of SOXL was 13 times larger than the second-most-bought stock over the same period — Alphabet, at $62.09 million.

The total market value of SOXL held by Korean retail investors stood at $6.56 billion as of Wednesday, making it the fourth-largest US stock holding among this group — behind Tesla ($19.16 billion), Nvidia ($18.30 billion) and Alphabet ($8.43 billion).

Buying interest in US equities has been broad-based this month. From the start of August through Thursday, Korean retail investors net-purchased $1.16 billion worth of US stocks.

Meanwhile, investor deposits — funds parked in brokerage accounts awaiting investment — have recovered the 100 trillion won ($70.7 billion) threshold.

According to the Korea Financial Investment Association, investor deposits totaled 100.07 trillion won as of Thursday, up 91.9 billion won from the previous session. It was the first time deposits had topped 100 trillion won in three trading days, a recovery attributed in part to the Kospi reclaiming the 7,000 level during intraday trading.

The balance of margin financing — a gauge of debt-fueled investing — also rose to 30.93 trillion won, extending its streak of gains to seven consecutive trading days.