Retail investors withdrew funds from Samsung Electronics and SK Hynix single-stock leveraged ETFs between the 20th and 23rd, according to Korea Exchange and financial industry data released on the 24th. The withdrawal followed 28-30% losses recorded in just 2 weeks as semiconductor stock volatility intensified. Financial authorities accelerated deposit requirement reforms to May 31, raising the entry threshold from 10 million KRW to 30 million KRW in cash, a measure originally scheduled for August. The products suffered from negative compounding effects as underlying assets fluctuated sharply on a daily basis, causing cumulative returns to deteriorate more severely than actual stock price declines.
Retail Investors Sell 4.5 Trillion KRW in Samsung and Hynix Leveraged ETFs
Individual investors maintained net buying in domestic ETFs overall this week with approximately 450 billion KRW in purchases, but shifted to net selling across all Samsung Electronics and SK Hynix single-stock leveraged ETFs. From the 20th to 23rd, retail investors net sold 984.4 billion KRW in 1Q SK Hynix Futures Single Stock Leverage ETF and 445.3 billion KRW in 1Q Samsung Electronics Futures Single Stock Leverage ETF. Additional net selling included 549.9 billion KRW in ACE Samsung Electronics Single Stock Leverage ETF, 1.8977 trillion KRW in ACE SK Hynix Single Stock Leverage ETF, 416.8 billion KRW in KIWOOM Samsung Electronics Futures Single Stock Leverage ETF, and 857.7 billion KRW in KIWOOM SK Hynix Futures Single Stock Leverage ETF.
Funds flowed into high-dividend ETFs offering relatively lower volatility and stable cash flow. Individual investors adjusted portfolios away from aggressive leveraged investments toward products pursuing stability and dividend income simultaneously. According to Shinhan Asset Management, SOL Financial Holdings Plus High Dividend ETF recorded 8.87% returns in the most recent 1-month period as of the previous day, significantly outperforming KOSPI's -13.49% in the same period. The ETF invests in major domestic financial holding companies including KB Financial, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group.
Financial Authorities Implement 30 Million KRW Deposit Rule on May 31
The Financial Services Commission, Financial Supervisory Service, Korea Exchange, and Korea Financial Investment Association announced they will implement strengthened basic deposit requirements for single-stock leveraged ETFs and ETNs on the 31st, earlier than the originally planned August implementation. General investors seeking to invest in single-stock leveraged products must maintain 30 million KRW in cash instead of the existing 10 million KRW basic deposit. Substitute securities including stocks, ETFs, and bonds previously recognized as deposits will no longer qualify, and existing investors will face identical standards for additional purchases.
The government revised the practice of recognizing sell proceeds as deposits before settlement, now recognizing them as deposits only after actual cash deposit. Single-stock leveraged products were introduced on May 27 to resolve domestic and international regulatory asymmetries and expand investor choice. Market capitalization and trading volume increased rapidly after launch, but recent sharp volatility expansion in global memory semiconductor sector stock prices led to continued calls for investor protection mechanisms. Financial authorities explained the supplementary measures aim to ease investment overheating and enhance market stability.
A securities industry official stated, "As the investment entry barrier rises, trading volume in single-stock leveraged ETFs is likely to decrease considerably. Considering the product characteristics with a high proportion of individual investors targeting short-term gains, trading turnover will likely decline, and funds are likely to disperse into relatively stable products such as dividend-type and index-type ETFs."
FAQ
What caused retail investors to withdraw from Samsung and Hynix leveraged ETFs?
Retail investors withdrew approximately 4.5 trillion KRW from Samsung Electronics and SK Hynix single-stock leveraged ETFs between the 20th and 23rd after the products recorded 28-30% losses in just 2 weeks due to semiconductor stock volatility and negative compounding effects.
When will the new deposit requirements for single-stock leveraged ETFs take effect?
Financial authorities will implement the strengthened basic deposit requirement of 30 million KRW in cash on May 31, earlier than the originally planned August implementation date. The requirement applies to all new investments in single-stock leveraged ETFs and ETNs.
What returns did high-dividend ETFs achieve compared to KOSPI?
According to Shinhan Asset Management, SOL Financial Holdings Plus High Dividend ETF recorded 8.87% returns in the most recent 1-month period as of the previous day, while KOSPI declined 13.49% in the same period.
