"Do You Need 30 Million Won in Your Bank Account to Buy 3x Vinegar?" — Retail Investors' Bitter Self-Deprecating Humor [World of Retail Investors]

[Financial News] A photo of chef Yeo Kyung-ok, the younger brother of chef Yeokyeongrae from the Netflix show "Culinary Class Wars," showing his stock account recently drew attention. Yeo had long been known for his stock-picking skills, even winning first place in a real-world investment competition in the past. But he recently admitted that his investment in a single-stock leveraged exchange-traded fund (ETF) tied to SK hynix had been cut in half. In the verification photo he posted, his initial capital of 120,547,970 won had fallen to 46,555,095 won, and the loss rate stood at -61.38%.
My war chest is nowhere near Yeo's, but even A, a 32-year-old office worker in his third year on the job, is now afraid to open his stock app. He had entered a single-stock leveraged ETF and is suffering heavy losses. The real problem, however, is that if the early implementation of regulations on single-stock leverage takes effect on the 31st, even averaging down will no longer be possible.
A said, "Wealthier investors may be fine, but people like me, who can't afford to keep 30 million won in cash on hand, are now being forced to either cut losses or hold on for the long term. The problem is that because this is leverage, I don't know whether simply hanging on will even improve returns. I'm wondering whether I should just swallow my pride and sell now."

Wherever you look, people are talking about single-stock leveraged ETFs. Recently, vinegar bottles became a viral "leverage meme" on online communities. Alongside images of apple vinegar, 2x apple vinegar, and 3x apple vinegar displayed side by side, users posted a stream of bitter jokes: "Apple vinegar has leverage too," "This is why leverage is dangerous — it has already spread to everyday essentials," "If you fail to season food with 3x vinegar, it means you have to add more than three times as much water," and "If you want to buy 3x apple vinegar, you need 30 million won in your bank account."
According to the manufacturer, the difference between regular apple vinegar, 2x apple vinegar, and 3x apple vinegar is acidity. Based on the 6% to 7% acidity of regular apple vinegar, the 2x version has an acidity of 13% to 14%, while the 3x version reaches 18% to 19%. The company said the 2x and 3x products were made for consumers who need higher acidity for cooking or for economic reasons.

Since single-stock leveraged ETFs were launched on May 27, the domestic stock market has been swept up in a leverage craze. According to data submitted by the Korea Financial Investment Association to Kang Myung-gu of the People Power Party, a member of the National Policy Committee, more than 1.16 million people completed the preliminary basic education required to invest in leveraged ETFs in the first half of the year alone.

As everyone rushed into leverage, the market capitalization of 16 single-stock leveraged products based on Samsung Electronics and SK hynix surged 2.7 times in less than two months, rising from 440 billion won at the time of listing to 1.19 trillion won as of the 15th of this month.
Then, as KOSPI volatility intensified and the 7,000-point level broke down, single-stock leveraged ETFs were blamed as a major cause. With even talk of delisting emerging and calls for countermeasures growing louder, the government stepped in with corrective measures. These include temporarily suspending new listings of single-stock products and banning advertising, while raising the basic deposit requirement from 10 million won to 30 million won in cash. For cash deposits, the rule will be improved so that funds are recognized only from the day the cash is actually credited after a securities sale, known as T+2. Investor pre-education will also be expanded from one hour to two hours.

What stands out is the exodus of individual investors from the market. According to the Korea Exchange on the 24th, individual investors net sold more than 680 billion won in the Korea Exchange Main Board over the three trading days from the 21st to the 23rd. They posted net sales of more than 220 billion won on the 21st, more than 190 billion won on the 22nd, and more than 250 billion won on the 23rd.
It is worth noting that among the stocks sold by individual investors, KODEX SK hynix single-stock leverage (-144.4 billion won) and KODEX Samsung Electronics single-stock leverage (-88.5 billion won) ranked near the top. On the same day, Koscom Corporation's ETF Check also said that net inflows into 14 Samsung Electronics and SK hynix single-stock leveraged ETFs listed in Korea totaled only 53.4 billion won over the previous week.

One official in the financial investment industry said, "This reflects both the government's tighter leverage regulations and the weakening of investor sentiment." The official added, "If the higher basic deposit requirement is brought forward, inflows from short-term speculative money could decline even further." Another official said, "This measure will likely cool overheated leverage trading, but among small investors it may also fuel a sense of deprivation and self-mockery, with people asking whether only the rich can access high-risk, high-return products."

[email protected] Kim Hee-sun Reporter