"I Lost Everything": What Happens to Retail Investors Who Bet on a Semiconductor Rebound? Leverage ETF Losses Hit 40%

[Financial News] As the declines in Samsung Electronics and SK hynix widened, losses are also growing for individual investors who bought leveraged exchange-traded funds (ETFs) in hopes of a rebound. In addition to the drop in the underlying assets, the so-called negative compounding effect from daily rebalancing has pushed losses on single-stock leveraged ETFs above 40%.
According to the Korea Exchange on the 29th, retail investors concentrated their buying on SK hynix and Samsung Electronics, which posted steep declines this month, as well as single-stock leveraged ETFs and index ETFs.
Top net-buying names included SK hynix and Samsung Electronics, along with KODEX SK Hynix Single Stock Leverage ETF, Samsung Electro-Mechanics, KODEX Leverage ETF, KODEX KOSDAQ 150 Leverage ETF, TIGER SK Hynix Single Stock Leverage ETF, TIGER U.S. S&P 500, Samsung KODEX 200 ETF, and KODEX Samsung Electronics Single Stock Leverage ETF.
The attempt to buy on weakness has led to losses. Retail investors are currently showing valuation losses in all of the top 10 net-bought stocks, with an average return estimated at -28.51% based on the gap between the average purchase price and the current share price.
The losses were even larger in single-stock leveraged ETFs. The returns on the common shares of SK hynix and Samsung Electronics, which retail investors bought heavily, were estimated at -23.55% and -20.06%, respectively. The single-stock leveraged products that track the two names at 2x leverage posted losses of more than 40%. As semiconductor stocks kept falling, investors suffered losses approaching half of their principal in less than a month after entering the market.
KODEX SK Hynix Single Stock Leverage ETF, the third-most net-bought stock by retail investors, closed at 9,930 won the previous day. The average purchase price for retail investors was 17,712 won. TIGER SK Hynix Single Stock Leverage ETF posted a loss rate of -45.43%, while KODEX Samsung Electronics Single Stock Leverage ETF showed a loss rate of -41.02%.

Meanwhile, concerns are being raised that the rise of China's semiconductor industry could dampen investor sentiment toward the domestic semiconductor sector. Still, some in the market expect that SK hynix's earnings announcement scheduled for later in the day could serve as a catalyst for a short-term rebound in share prices.


[email protected] Han Seung-gon Reporter