Trading in leveraged exchange‑traded funds that target twice the daily performance of Samsung Electronics and SK Hynix has collapsed, with market value now only about 4% of its late‑June high. At one stage, activity in these ETFs and the underlying shares represented more than 80% of total turnover on the Korean market.
The products have recorded roughly $1 billion of net outflows in August, putting them on track for their first monthly net withdrawal. Assets under management fell to about $5 billion as of Aug. 27, down from a late‑June peak of $11.4 billion.
South Korean regulators introduced a mandatory five‑day simulated‑trading program on Aug. 19. Investors must install a Windows‑only application and spend at least one hour each day trading with virtual funds before they can access the leveraged ETFs. The measure follows earlier steps, such as raising the minimum deposit, intended to curb speculative buying. The ETFs were first launched in May.
The broader market has also cooled. The KOSPI volatility index slipped to a four‑month low near 50, compared with 97 in late June. The benchmark index is up 61% year‑to‑date but remains about 25% below its record set two months earlier. Global technology sell‑offs and lingering doubts about AI spending have further dampened demand for the chip‑focused products.
Bloomberg Intelligence analyst Rebecca Sin warned that outflows could persist as regulators tighten restrictions.
