"Next is KOSDAQ"... Retail investors bet 370 billion won on leveraged ETFs

[Financial News] As KOSDAQ continued to show relatively stronger momentum than KOSPI, retail investors were found to have aggressively bought KOSDAQ 150 leveraged exchange-traded funds (ETFs). While dumping many individual KOSDAQ stocks, they are making bold bets on a rebound in the index.
According to ETFCHECK on the 5th, the top ETF in net buying by retail investors from the 27th of last month to the 3rd of this month was the 'KODEX KOSDAQ 150 Leverage ETF,' with net purchases totaling 373.8 billion won. Over the same period, they also bought 106.5 billion won worth of the 'Samsung KODEX KOSDAQ 150 ETF,' which ranked fifth in net buying. Retail inflows into the two products alone reached 480.3 billion won.
By contrast, retail investors posted net sales of 1.1169 trillion won in the KOSDAQ spot market during the same period. The move is seen as a bet on a short-term rebound in the KOSDAQ index through ETFs rather than taking on the earnings risk of individual companies.
KOSDAQ's relative strength has also supported this investor sentiment. After rising 11.63% on the 31st of last month, it gained another 2.44% on the 3rd of this month and 5.88% the previous day. As the rally continued, a buy-side sidecar was triggered for three consecutive trading sessions in the KOSDAQ market.
However, the return on the KODEX KOSDAQ 150 Leverage ETF from the 27th of last month to the 3rd of this month was -10.54%. The Samsung KODEX KOSDAQ 150 ETF also returned -3.71% over the same period. Because the index has swung sharply intraday and leveraged ETFs track twice the daily return, losses can widen as volatility increases.
Brokerage analysts say much of the money tracking the KOSDAQ 150 is more short-term trading capital than long-term holdings. Among ETFs that track the KOSDAQ 150, net assets in leveraged and inverse products stand at about 3 trillion won, roughly one-third of the total tracking ETF assets.
Lee Jae-won, a researcher at Yuanta Securities Korea Co., Ltd., said, "The impact of tighter regulation on single-stock leveraged ETFs has begun to spill over into KOSDAQ." He added, "Funds leaving semiconductors have moved into pharmaceutical and biotech industry names and robots, bringing in rotational buying."
He continued, "The scenario that easing concentration in large-cap semiconductors will create a spillover effect for small- and mid-cap growth stocks is becoming a reality." He said, "We believe this is a phase in which warmth is spreading across the broader market."
 
[email protected] Bae Han-geul Reporter