As South Korean stocks tumbled sharply, individual investors once again poured money into leveraged products tied to Samsung Electronics and SK hynix, betting on a rebound in semiconductor shares.
At the same time, similar funds were also aggressively buying a triple-leveraged semiconductor ETF in the U.S. market.
According to data from the Korea Exchange and Koscom ETF Check, between October 1 and October 23, individual investors net bought a combined 315.4 billion won across 14 single-stock leveraged products linked to Samsung Electronics and SK hynix. Among them, seven SK hynix-related products saw net buying of 226.3 billion won, while seven Samsung Electronics-related products recorded net buying of 89.1 billion won. This marked the first return to net buying this month since late July, when tighter regulations pushed individual investors into net selling.
In overseas markets, South Korean investors were equally active. According to the Korea Securities Depository, between October 1 and October 22, domestic investors net bought $4.89 billion (approximately 6.36 trillion won) worth of U.S. stocks, of which the Direxion Daily Semiconductors Bull 3X Shares ETF (SOXL), which tracks triple the daily return of a U.S. semiconductor index, accounted for as much as $3.54764 billion (approximately 4.70 trillion won) in net buying, representing 73.9% of total net U.S. stock purchases during the same period.
First return after regulatory tightening
In July of this year, individual investors had heavily bought the aforementioned 14 single-stock leveraged products, with monthly net buying reaching 2.7728 trillion won. However, after regulators raised margin requirements and introduced other measures on July 31, individual investors quickly reversed course, recording net selling of 648.4 billion won in August and 497.9 billion won in September.
Entering October, the KOSPI index fell by a cumulative 18.83%. Market observers believe it was precisely this sharp correction that led some retail investors to judge that stock prices had approached a bottom, prompting them to re-enter and bet on a rebound.
KODEX series products become the focus of fund inflows
At the product level, the "KODEX SK hynix Single-Stock Leverage" ETF saw net buying of 152.9 billion won, ranking 11th among all ETFs listed in South Korea.
Beyond single-stock leveraged products, individual investors also heavily bought broad-based leveraged products that track double the gains of the broader market and the semiconductor sector — "KODEX Leverage" recorded net buying of 1.0448 trillion won, while "KODEX Semiconductor Leverage" saw net buying of 256.4 billion won, demonstrating retail investors' strong expectations for an overall rebound in the semiconductor sector.
It is worth noting that leveraged ETFs track a multiple of the underlying asset's daily return, and once the trend moves against expectations, losses are magnified accordingly. Moreover, in an environment of severe market volatility with repeated ups and downs, even if the underlying asset price eventually returns to its original level, investors may still suffer actual losses due to the "negative compounding effect," and the risks should not be underestimated.
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