Picking Up a Falling Knife... Samsung and SK Hynix Leveraged Products Absorb 7 Trillion Won

[Financial News] Single-stock leveraged products tied to Samsung Electronics and SK hynix absorbed more than 7 trillion won in fresh funds over the past month.
According to the Korea Exchange on the 17th, a total of 7.3364 trillion won in net inflows went into 16 single-stock leveraged products linked to Samsung Electronics and SK hynix, including two inverse products, from the 16th of last month to the 15th of this month.
By product, the KODEX SK Hynix Single Stock Leverage ETF drew 3.4472 trillion won, the largest amount among all exchange-traded funds (ETFs).
It was followed by the Samsung Electronics Single-Stock Leveraged ETF with 1.5083 trillion won and the MiraeAsset TIGER SK Hynix Single Stock Leverage ETF with 1.4271 trillion won.
Even as the share prices of the underlying stocks fell sharply, money continued to pour into these single-stock leveraged products. Between the 16th of last month and the 16th of this month, SK hynix plunged 19.49%, while Samsung Electronics fell 24.33%.
As a result, the KODEX SK Hynix Single Stock Leverage ETF and the Samsung Electronics Single-Stock Leveraged ETF, which recorded the largest net inflows, also dropped 45.60% and 48.44%, respectively.
Retail investors are believed to have accounted for a large share of this money. In fact, over the past month, individuals bought a net 423.86 billion won worth of SK hynix single-stock leveraged products (seven funds) and 161.19 billion won worth of Samsung Electronics single-stock leveraged products (seven funds).
That far exceeded foreign investors' net purchases of 85.95 billion won and 72.42 billion won. Institutions, meanwhile, were net sellers by 517.13 billion won and 226.71 billion won.
As single-stock leveraged products have been blamed for amplifying market volatility by sucking in large amounts of money, the financial authorities announced countermeasures on the 16th to tighten investment requirements.
From the 5th of next month, the minimum deposit required to invest in single-stock leveraged products will triple from 10 million won to 30 million won. The current practice of easing the minimum deposit requirement after about three months, depending on trading experience and other factors at each securities firm, will also be blocked.
The trading unit will also be temporarily expanded from one share to 20 shares. The move is intended to curb so-called small-scale day trading. It is scheduled to take effect in November.
In addition, the required training time will increase from two hours to three, new listings of single-stock leveraged products will be suspended until the market stabilizes, and advertising and marketing for already listed products will be prohibited.
Still, doubts are emerging in the market over the policy's effectiveness. Some worry that raising the minimum deposit could instead prompt investors to sell existing individual stocks and funnel the proceeds into leveraged products. In the end, that could drain demand from other KOSPI stocks, and especially from KOSDAQ names.

taeil0808@fnnews.com Kim Tae-il Reporter