Month after leverage curbs on Samsung, SK hynix ETFs, retail investors dump W1.7tr in products

Retail investors have net sold roughly 1.7 trillion won ($1.23 billion) worth of single-stock leverage products tied to Samsung Electronics and SK hynix since tighter regulations took effect, with average daily trading volume this month shrinking to about one-ninth of its pre-restriction level.

According to Korea Exchange and Koscom CHECK data, retail investors posted net selling of 1.77 trillion won across 16 single-stock leveraged and inverse products linked to Samsung Electronics and SK hynix between July 31 and Friday.

Before the tightened rules, retail investors had net purchased a combined 15.29 trillion won in those products from May 27 — when the single-stock leverage ETFs were simultaneously listed — through July 30, the day before the minimum deposit requirement was raised.

By product, they bought 9.94 trillion won worth of the eight SK hynix single-stock leveraged and inverse products and 5.35 trillion won worth of the eight Samsung Electronics equivalents.

The combined net asset value of all 16 Samsung Electronics and SK hynix single-stock leveraged and inverse products grew 16.9 percent, from 5.01 trillion won on May 27 to 5.85 trillion won on July 30.

The picture changed sharply after July 31, when the minimum deposit requirement was raised from 10 million won to 30 million won.

In roughly one month from the day the regulation took effect through Friday, retail investors net sold 531.6 billion won in Samsung Electronics-linked products and 1.24 trillion won in SK hynix-linked products, for a combined 1.77 trillion won.

Trading volume also fell sharply. Daily turnover across the 16 products started at 10.42 trillion won on July 27 and climbed to a peak of 19.44 trillion won on June 24.

Average daily turnover from May 27 through July 30 stood at 11.68 trillion won. On a monthly basis, it rose from 9.29 trillion won in May to 11.43 trillion won in June and 12.27 trillion won in July.

After the tighter rules kicked in, daily turnover dropped to 3.15 trillion won on July 31 and fell further to 537 billion won on Friday.

Average daily turnover this month came to 1.01 trillion won — roughly one-ninth the level recorded from the products' launch through the day before the restrictions took effect.

Financial regulators raised the minimum deposit from 10 million won to 30 million won and made simulated trading mandatory for single-stock investments, citing persistent concerns that single-stock leverage products were amplifying volatility in the domestic equity market. Additional measures — including expanding the minimum trading unit to 20 shares at a time — are set to take effect by November.

Market observers say the regulations have helped ease the concentration in semiconductor-linked products and reduce volatility, but some warn of a "balloon effect" in which investors have simply migrated to other leveraged products.

That shift is visible in trading data: from July 31 through Friday, "KODEX Leverage" ranked second by turnover with an average daily trading value of 2 trillion won, while "KODEX Kosdaq150 Leverage" ranked sixth at 754.3 billion won and "KODEX 200 Futures Inverse 2X" ranked seventh at 750.5 billion won.

Meanwhile, Korean retail investors active in US markets — known as "seohak gaemi," or "western ants" — net purchased $187.37 million worth of QLD (ProShares Ultra QQQ), an ETF that tracks the NASDAQ 100 index at twice its daily return, between Aug. 3 and Friday.