South Korea is set to launch its first leveraged exchange-traded funds (ETFs) tied to individual stocks, with initial products focusing on Samsung Electronics and SK Hynix. These ETFs are expected to debut as early as May, offering investors twice the daily return of the two chipmaking giants.
According to local reports, financial regulators and industry sources have confirmed that single-stock leveraged ETFs tracking Samsung and SK Hynix will soon be available. These new products will aim to deliver twice the daily positive or negative performance of the underlying stocks, marking a shift from traditional leveraged ETFs that track broad market indices to more concentrated investment tools.
Specific implementation rules, including market capitalization thresholds, trading volume requirements, and derivatives hedging conditions, are expected to be announced within the month. Major asset managers such as Samsung Asset Management and Mirae Asset Global Investments are already preparing related products.
Previously, South Korea prohibited single-stock leveraged ETFs, leading many investors to seek similar products listed overseas. For instance, Samsung Electronics Daily Leveraged (2x) and SK Hynix Daily Leveraged (2x) ETFs offered by ChinaAMC have attracted significant interest from Korean investors. Data shows that the Samsung ETF saw net purchases of $7.46 million from Korean investors last month, ranking among the most actively traded products on the Hong Kong Exchange.
The initial batch of leveraged ETFs will be limited to Samsung and SK Hynix. Regulators will evaluate the possibility of expanding the list of eligible stocks based on market performance.
As core components of the Korean stock market, Samsung and SK Hynix were selected for the pilot program due to their substantial market influence and high liquidity. Together, the two companies account for over 30% of the total market capitalization of the KOSPI index and are among the most heavily traded stocks in Korea. Their prominent roles in the global memory chip sector also make them closely watched by investors.
The Financial Services Commission has confirmed that the leverage ratio for these ETFs will be capped at two times, lower than the previously speculated three times, reflecting a cautious regulatory approach. A daily rebalancing mechanism will be used to maintain the target leverage ratio.
Detailed operational guidelines are still pending. These are expected to cover quantitative criteria for eligible stocks, specifications for derivatives hedging, and qualification requirements for asset management firms. Samsung Asset Management and Mirae Asset Global Investments have completed preliminary preparations and plan to proceed with product filings promptly after the rules are finalized.
The move to allow single-stock leveraged ETFs is seen as a response to strong domestic demand for leveraged investment tools and competition from overseas markets. Until now, Korean investors could only access leveraged ETFs tracking broad indices, prompting many to turn to markets like Hong Kong for single-stock exposure.
For example, ChinaAMC’s leveraged ETFs tracking Samsung and SK Hynix have seen significant growth. As of March 23, their net asset values reached HKD 7.108 billion and HKD 19.014 billion, respectively, reflecting increases of approximately HKD 6.7 billion and HKD 14.026 billion since the end of last year. Korean investors have been major contributors to this growth.
In January, the Financial Services Commission announced plans to accelerate approvals for single-stock leveraged ETFs as part of efforts to retain domestic capital and enhance the competitiveness of Korea’s capital markets. The launch of these products signals a regulatory shift from an outright ban to a supervised development approach.
Authorities will monitor the performance of the initial ETFs before considering an expansion to include other leading companies. There are also reports of a planned restructuring of the KOSDAQ market next year, including the creation of a “top-tier” index composed of major firms, with corresponding ETF products to further diversify market offerings.
According to regulatory data, the net asset value of South Korea’s ETF market reached KRW 381.3 trillion (approximately USD 254.2 billion) as of March 20, a nearly 30% increase since the start of the year. Market observers believe the introduction of single-stock leveraged ETFs will attract both domestic and international investors, supporting further growth in the ETF market.
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