South Korean leveraged exchange‑traded funds that aim to double daily returns of domestic chipmakers Samsung Electronics and SK Hynix have seen a sharp contraction in assets and trading volume. Assets under management dropped from a late‑June peak of $11.4 billion to roughly $5 billion as of August 27, and the combined outflows in August totalled about $1 billion, putting the products on track for their first monthly net outflow.
Turnover in the leveraged ETFs and the underlying Samsung and SK Hynix shares previously accounted for more than 80% of total market trading. By early August, trading value in the products had fallen to just 4% of its June peak. The broader market has been volatile, with the KOSPI index up 61% year‑to‑date but down about 25% from its record two months earlier, and the volatility gauge slipping from 97 in late June to a four‑month low near 50.
Regulators introduced a mandatory five‑day simulated‑trading course on August 19 as a deterrent to speculative activity. Participants must download a Windows‑only program and trade with virtual funds for at least one hour each day before gaining access to the leveraged ETFs. The measure follows earlier steps, including a higher minimum deposit, aimed at cooling sharp swings in the Korean stock market.
Bloomberg Intelligence analyst Rebecca Sin said the outflows could continue in the near term as authorities tighten restrictions. Global technology sell‑offs and concerns over AI spending have also weighed on demand for the products.
