Fourteen single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix fell approximately 11% on the 8th, according to Korea Exchange and KOSCOM CHECK data. The decline followed 12-13% drops the previous day, driven by continued weakness in Samsung Electronics and SK Hynix stock prices. All 14 ETFs dropped below their 20,000 won listing price. South Korean financial regulators stated they are reviewing measures to address market volatility concerns, while political discussions have emerged regarding potential delisting of these products.
ETF Prices Fall Below Listing Price With Monthly Losses Reaching 43%
The only ETF that remained above 20,000 won the previous day, 'KODEX SK Hynix Single Stock Leverage', closed at 19,635 won on the 8th, down 11.27% from the previous session. Four Samsung Electronics leveraged ETFs — 'TIGER Samsung Electronics Single Stock Leverage' (14,850 won), 'ACE Samsung Electronics Single Stock Leverage' (14,805 won), 'RISE Samsung Electronics Single Stock Leverage' (14,900 won), and 'KIWOOM Samsung Electronics Futures Single Stock Leverage' (14,615 won) — fell to the 14,000 won range, representing maximum declines of up to 27% from their listing price.
Monthly returns from the 1st to 8th ranked at the bottom among all exchange-traded funds (ETFs). SK Hynix single-stock leveraged ETFs occupied the bottom 1st-2nd and 4th-8th positions in overall ETF performance. 'KIWOOM SK Hynix Futures Single Stock Leverage' recorded the largest decline at -43.53%, followed by '1Q SK Hynix Futures Single Stock Leverage' at -43.49%. The other five products showed declines of 42-43%.
Retail Investors Continue Net Buying Despite Mounting Losses
Individual investors maintained net buying positions in single-stock leveraged ETFs during the period from the 1st to 8th. Retail investors net purchased 563.8 billion won of 'KODEX Samsung Electronics Single Stock Leverage' and 208.6 billion won of 'TIGER Samsung Electronics Single Stock Leverage'. They net purchased 1.1092 trillion won of 'KODEX SK Hynix Single Stock Leverage' and 469.3 billion won of 'TIGER SK Hynix Single Stock Leverage'.
Investor community posts included statements such as "My return rate is -50%," "Even if it reaches the previous high, recovery has become difficult," and "Greed brought disaster. I hope tomorrow brings a rebound to cover some losses."
Financial Regulators and Politicians Address Volatility Concerns
FSS Governor Lee Chan-jin stated on the 6th at the 3rd Consumer Risk Response Council meeting at the Yeouido headquarters in Seoul: "If household financial assets are excessively concentrated in specific asset classes or if leverage beyond a manageable level is used for investment, not only are they exposed to high loss risks, but household financial soundness can be seriously damaged."
Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul stated the following day: "We made people receive education (for leverage investment) and prepared certain guidelines, but given the various concerns raised at this point, we are discussing what measures can stabilize this."
Lawmaker Ahn Cheol-soo of the People Power Party stated on the 6th via Facebook: "Samsung-Hynix leverage has completely failed as a policy. It is eating away trillions of won in corporate value and people's assets every day. Strong corrective measures including delisting are needed to normalize the stock market."
A securities industry official stated: "Single-stock leverage added fuel to the fire in a situation where Samsung Electronics and SK Hynix already have high volatility," but added, "With a considerable number of investors already involved, delisting is realistically not easy."
FAQ
Q: What happened to single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix on the 8th?
A: All 14 single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix fell approximately 11% on the 8th, following 12-13% declines the previous day. All ETFs dropped below their 20,000 won listing price.
Q: How much did SK Hynix leveraged ETFs decline from the 1st to 8th?
A: SK Hynix single-stock leveraged ETFs recorded monthly declines ranging from 42% to 43.53% during the period from the 1st to 8th, with 'KIWOOM SK Hynix Futures Single Stock Leverage' showing the largest decline at -43.53%.
Q: What did South Korean financial officials say about these leveraged products?
A: FSS Governor Lee Chan-jin stated on the 6th that excessive leverage can expose households to high loss risks and damage financial soundness. Deputy PM Koo Yoon-chul stated on the 7th that authorities are discussing stabilization measures given the concerns raised.
