"Still the Only One We Can Trust" Retail Investors Pile Into Samsung Electronics and SK hynix Leveraged ETFs

[Financial News] Even as volatility in the domestic stock market intensified, retail investors continued to show strong interest in leveraged ETFs tied to Samsung Electronics and SK hynix.
According to Koscom Corporation on the 24th, the top retail net-buy ETF products on the previous day were leveraged ETFs tracking SK hynix, Samsung Electronics and other stocks.
Based on closing prices on the 23rd, the products that recorded the largest net purchases were the KODEX SK Hynix Single Stock Leverage ETF (638.6 billion won), KODEX Leverage (425.5 billion won), MiraeAsset TIGER SK Hynix Single Stock Leverage ETF (365.6 billion won), and the KODEX Samsung Electronics Single-Stock Leveraged ETF (135.1 billion won).
Even after semiconductor stocks that had led the previous day's gains plunged, sending the KOSPI down more than 8% amid sidecar-triggered selling in both the KOSPI and KOSDAQ, retail investors actually increased their buying of leveraged ETFs.
An industry source said, "There may be some averaging down, but it seems the buying by investors who blindly trust the strong concentration in Samsung Electronics and SK hynix is not easing easily." The source added, "With market volatility expected ahead of the KOSDAQ promotion and relegation system set to begin in the second half, retail flows appear to be concentrating on Samsung Electronics and SK hynix, the semiconductor blue chips."
As of 10:33 a.m. that day, Samsung Electronics was up 6.8% from the previous day's close, while SK hynix was also rising by nearly 4%.
However, concerns are also emerging that retail investors are blindly chasing leveraged ETF products, especially as the National Pension Service (NPS), a major player in Korea's capital market, is expected to rebalance its stock allocation starting next month.
Hwang Sung-yeob, chairman of the Korea Financial Investment Association (KOFIA), also met with reporters the previous day and agreed that improvements are needed, citing concerns over accumulated losses due to the nature of leveraged products and abnormal premium-discount gaps.
Hwang said, "Since the launch of single-stock leveraged products in May, many people have worried about how they might affect the market." He added, "In Korea especially, the share of leveraged investing by retail investors is large, so I was concerned that a culture of unhealthy investing could take root through sharp rises and falls."
He went on to say, "In particular, because Samsung Electronics and SK hynix account for a large share of the underlying assets in leveraged products, volatility in those products can become even greater." He added, "Samsung Electronics and SK hynix together account for more than 50% of KOSPI market capitalization. If the amplitude widens because of compounding effects, losses could grow larger, so retail investors should approach these investments with caution."


kakim@fnnews.com Kim Kyung-a Reporter