South Korea's Leveraged Chip ETF Plunges 45%, Retail Investors Suffer Heavy Losses

BlockBeats News, July 14th. Over a dozen single-stock leverage ETFs listed in South Korea at the end of May saw a significant drop, with multiple products tracking Samsung Electronics and SK Hynix seeing their prices nearly halved. Among them, the $3.4 billion "SAMSUNG KODEX SK Hynix Single Stock Leverage ETF" has experienced a cumulative decline of about 45% since its listing, with a pullback of over 60% from its peak in June.

The total assets under management of related products are approximately $3 billion. On Monday, SK Hynix plunged 15% to a record low, and during Tuesday's trading, it dropped another over 8%, with the KOSPI index falling by 5% and dipping below 6500 points. Jung In Yun, CEO of Fibonacci Asset Management, stated that many retail investors view leveraged ETFs as long-term investment tools. The sharp drop in the products has caused significant losses for them, which may weaken their willingness and ability to continue buying semiconductor stocks.

Last month, South Korea's top financial regulator expressed regret over approving such products for listing, but the enthusiasm for retail trading has not significantly cooled down. In the past month, leveraged and inverse exchange-traded products in South Korea attracted a total of $3.8 billion in inflows, mainly flowing into single-stock products tracking SK Hynix and Samsung Electronics. Jung In Yun expects that the regulatory agencies may strengthen suitability requirements, risk disclosure, and investor education instead of completely halting the products.

On the same day, the South Korean government raised this year's economic growth forecast from 2% to 3%, believing that the demand for AI chips will continue to offset some of the drag from the Middle East conflict. They also anticipate that this year's current account surplus will reach a record $290 billion.