South Korean retail investors recorded their first monthly net buying of single-stock leveraged ETFs since regulators tightened investment rules at the end of July. As the Korean stock market plunged, demand to bet on a rebound in major chip companies such as Samsung Electronics and SK Hynix heated up again.
Data from the Korea Exchange on the 25th showed that from the 1st to the 23rd of this month, individual investors net bought 14 single-stock leveraged ETFs linked to Samsung Electronics and SK Hynix, with a combined amount of 315.4 billion won (equivalent to 221 million US dollars). Among them, seven products related to SK Hynix saw net buying of 226.3 billion won, while seven products related to Samsung Electronics saw net buying of 89.1 billion won. This marks the first time retail investors have shifted to monthly net buying since the new regulatory rules took effect at the end of July.
In July, retail investors had net bought these 14 single-stock leveraged ETFs for a total of 2.77 trillion won. After regulators raised minimum margin requirements and other rules on July 31, retail investors turned to net selling, with net selling of 648.4 billion won in August and 497.9 billion won in September, before returning to the buying side this month.
On an individual product basis, retail investors' net buying of the KODEX SK Hynix single-stock leveraged ETF reached 152.9 billion won, ranking 11th among all listed ETFs in South Korea. In addition to single-stock leveraged products, the KODEX Leveraged ETF and the KODEX Semiconductor Leveraged ETF attracted inflows of 1.04 trillion won and 256.4 billion won, respectively.
During the same period, the KOSPI plunged 18.83%, and bargain-hunting funds betting on a rebound in the broader market and large chip stocks poured into high-multiple leveraged products. Foreign investors acted in a different direction.
Over the same period, foreign investors net bought 148.3 billion won of the KODEX Leveraged ETF, while also net buying 51.3 billion won of the KODEX 200 Futures 2x Inverse ETF (a product whose return is twice the inverse of the daily change in the KOSPI 200 index). Foreign investors collectively net sold 48.8 billion won of the aforementioned 14 single-stock leveraged ETFs, including selling 50.8 billion won of SK Hynix-related products while slightly net buying 2 billion won of Samsung Electronics-related products.
Han Soo-jin, a senior researcher at Samsung Securities, said: "After the domestic stock market fell sharply, the market expects the index to rebound, and leveraged ETFs have seen a large amount of buying."
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