"Can't Buy After the 31st"...Retail Investors Make a Bold Move as Samsung Electronics and SK hynix Plunge

[Financial News] Ahead of the early implementation on the 31st of a rule raising the cash deposit requirement for single-stock ETFs to 30 million won, retail investors rushed in with last-minute averaging-down purchases. As shares of the semiconductor giants Samsung Electronics and SK hynix plunged, individual investors appear to have poured in funds to buy at lower prices before the tighter rules take effect.
According to the Korea Exchange and Koscom Corporation on the 27th, individual investors bought a net 453.8 billion won worth of 14 single-stock leveraged ETFs tied to Samsung Electronics and SK hynix in a single day on the 24th.
That amount nearly wiped out, in just one day, most of the 547.1 billion won in net selling recorded over the previous three days from the 21st to the 23rd. By stock, they purchased 350 billion won worth of seven SK hynix single-stock leveraged products and 103.8 billion won worth of seven Samsung Electronics single-stock leveraged products.
The main trigger for the buying spree was the sharp drop in the underlying stocks. On the 24th, a so-called "Black Friday" sent the KOSPI down more than 5%, and Samsung Electronics (-7.59%) and SK hynix (-8.34%) both fell sharply.
As a result, the prices of single-stock leveraged products, which track twice the return of the underlying asset, also fell 15% to 16% in just one day. With most products, except for the flagship "KODEX SK Hynix Single Stock Leverage ETF," dropping to around 11,000 to 12,000 won, roughly half their listing-day price on May 27, bargain hunters rushed in to buy the dip.

The early announcement of the regulatory change by the financial authorities acted as a decisive catalyst. The Financial Services Commission (FSC) said it would move up the implementation of its plan to raise the basic deposit requirement for single-stock leveraged products, originally scheduled for August, to the 31st.
To stabilize demand, the implementation date has been significantly advanced. Excluding collateral securities such as stocks and bonds, investors must now hold only 30 million won in cash to make new purchases or add to existing positions. As a result, analysts say a wave of averaging-down demand hit the market before the higher deposit requirement took effect.
Posts on investor communities also reflected the mood, with messages saying that additional buying would become difficult once the deposit requirement rises, so investors should average down now before the rule changes.
Brokerage analysts expect that after the 31st, when the regulation takes full effect, new capital inflows into the single-stock leveraged ETF market will be sharply restricted, easing some of the extreme volatility.
Seol Dae-hyun, a researcher at DB Securities, said, "The trend is toward tighter entry requirements and operating rules, including pre-investment education, higher basic deposits, and restrictions on margin trading, to protect investors." He added, "If additional new funds are limited, the 'Wag the Dog' effect, in which derivatives shake the spot market, will ease over time."
[email protected] Moon Young-jin Reporter