Highly Leveraged ETF Investors in Samsung and SK Hynix Still Suffering Heavy Losses, Some Products Need Over 300% Gain to Break Even

BlockBeats News, August 16th. According to Korean media reports, Samsung Electronics and SK Hynix have recently rebounded, and related single-stock leveraged ETFs have also seen a significant recovery. However, investors who bought near the peak on June 25th are still facing substantial losses. As of August 14th, Samsung Electronics has fallen by 23.43% from the June 25th closing price, while SK Hynix has dropped by 43.61% during the same period.

Data shows that 7 Samsung Electronics single-stock leveraged ETFs have an average loss of 52.25% since June 25th, and 7 SK Hynix leveraged ETFs have an average loss of 76.51%. If an investor had invested 1 million Korean won in each at that time, they would now have an average of only about 478,000 Korean won and 235,000 Korean won remaining. Based on the current net asset value, these two types of ETFs would need to rise by about 109.4% and 325.7%, respectively, to break even.

Due to the daily leverage factor of these leveraged ETFs, the required target asset increase for the original capital recovery cannot be calculated simply based on a double relationship. Price fluctuations will also incur volatility losses. Assuming that the target asset rises by the same percentage each day for the next 20 trading days without any decline, Samsung Electronics would need to rise by about 45.2% to 398,600 Korean won, and SK Hynix would need to rise by approximately 109.1% to 3,439,000 Korean won for the average loss of related leveraged ETFs to be eliminated.

Currently, Samsung Electronics and SK Hynix's 12-month forward P/E ratios have dropped to 4.5 times and 3.7 times, respectively. Kim Dong-won, Head of Research at KB Securities, stated that storage demand is expected to further strengthen in the coming years and anticipates that both companies are likely to see a stock price revaluation starting from the third quarter.