Money Pours into Samsung Electronics and SK hynix ETF Even as Semiconductor Stocks Swing

Semiconductor stocks have been swinging sharply this month, but investors who see the pullback as an opportunity are piling into leveraged exchange-traded funds (ETFs) and making aggressive bets. Industry experts say caution is needed, as leveraged investing can magnify losses in a volatile market marked by sharp ups and downs.
According to the Korea Exchange on the 8th, 14 leveraged ETFs tied to Samsung Electronics and SK hynix accounted for 27.6% of all ETF trading so far this month through the previous day.
During that period, Samsung Electronics and SK hynix fell 11.38% and 16.94%, respectively, but the share of leveraged trading edged up from 26.6% in the previous month. With 1,144 ETF listings in total, just 1.2% of the products accounted for more than a quarter of overall market trading.
Trading was concentrated on buying. Data from FnGuide showed that 261.14 billion won in net inflows went into 14 single-stock leveraged ETFs linked to Samsung Electronics and SK hynix over the past week, from the 1st to the 7th. In particular, KODEX SK hynix single-stock leverage attracted 123.14 billion won in a week, ranking first among all ETFs in net inflows. TIGER SK hynix single-stock leverage, KODEX Samsung Electronics single-stock leverage, and TIGER Samsung Electronics single-stock leverage also drew strong net buying.
A single-stock leveraged ETF aims to deliver twice the return of a specific stock. When the underlying asset rises, gains are doubled. But if it falls, losses are also doubled.
In particular, when prices swing sharply, the so-called negative compounding effect can erode principal. For example, if a stock falls 10% from 10,000 won and then rises 10% the next day, it ends up at 9,900 won. But a 2x leveraged product would fall 20% and then rise 20%, leaving it at 9,600 won. As the swings continue, losses can widen.
Lee Hyo-seop, a senior research fellow at the Korea Capital Market Institute, said, "Even though Samsung Electronics posted record operating profit, the stock market is moving wildly, with share prices plunging." He added, "In a highly volatile environment like this, it seems more advisable to buy in installments over the long term rather than use leveraged products."
With concerns over the semiconductor cycle at a peak and uncertainties remaining around geopolitical risks and monetary policy, volatility is expected to remain elevated for now. Jung Sang-hwi, a researcher at Kyobo Securities, said, "The instability in commodity markets caused by geopolitical tensions, the resulting supply-chain shocks, and the pass-through to inflation take a considerable amount of time." He added, "Market caution over the path of monetary policy is likely to continue, and concerns over uncertainty related to economic policy are likely to spread."
Still, the recent stock decline is widely seen as driven by noise surrounding the semiconductor industry, rather than any damage to fundamentals. Kwon Soon-ho, a researcher at Daishin Securities, said, "Index swings can occur even without changes in fundamentals, as money unwinds from crowded trades, investors take profits, and portfolios are rebalanced." He added, "Earnings estimates are still trending upward, so it is too early to worry about a broad market peak-out."
[email protected] Seo Min-ji Reporter