Data shows that on the 24th, South Korean retail investors made a massive single-day purchase of 14 leveraged exchange-traded funds (ETFs) tied to individual stocks, with net buying reaching approximately 450 billion won. This came after three consecutive trading days from July 21st to 23rd, during which retail investors had net sold a total of 500 billion won.
To stabilize the market for individual stock leveraged products, the South Korean government raised the minimum cash margin threshold from 10 million won to 30 million won and refined related rules. Proceeds from the sale of alternative collateral securities will not be counted toward the margin requirement until the cash is actually received. The new rules will take effect on the 31st. From that date, only investors holding more than 30 million won in cash can open new positions or increase existing ones. The minimum margin standard cannot be lowered for a certain period after a transaction is completed.
Data from the Korea Exchange and KOSCOM CHECK on the 26th shows that from July 21st to 23rd, retail investors net sold 14 individual stock leveraged products for three consecutive days, with total net sales amounting to 547.17138 billion won.
This net selling trend reversed completely on the 24th. On that day, seven leveraged products tied to Samsung Electronics saw net purchases of 103.8959 billion won by retail investors, while seven leveraged products tied to SK Hynix saw net purchases of 350.02688 billion won.
In a single day, retail investors bought a total of 453.83647 billion won worth of leveraged products linked to Samsung Electronics and SK Hynix.
This massive buying spree occurred during South Korea's "Black Friday," when the Korea Composite Stock Price Index (KOSPI) plunged over 5%. Samsung Electronics and SK Hynix closed with losses of 7% to 8%. On the 24th, Samsung Electronics closed down 7.59%, and SK Hynix fell 8.34%, causing leveraged ETFs based on these two stocks to plummet by 15% to 16%.
Except for the KODEX SK Hynix Individual Stock Leveraged ETF (currently trading at 13,015 won), the prices of the remaining 13 products fell to between 11,000 and 12,000 won, nearly halving from their 20,000 won issue price when they were listed on May 27th.
The sharp price drop in these individual stock leveraged products attracted a flood of bargain-hunting capital. Additionally, with the margin threshold set to rise on the 31st, many retail investors rushed to increase their positions to lower their average cost before the regulatory tightening took effect.
Major investment forums are filled with related posts: "Short the inverse product first, then add leverage to lower the average cost after the drop," and "The entry barrier will be higher after the margin threshold is raised, so if you want to lower your average cost, you have to do it now."
The South Korean Financial Services Commission announced on the 24th that the policy to tighten the margin threshold, originally scheduled for August, would be implemented on the 31st. Starting from the 31st, only investors holding more than 30 million won in cash will be able to open new positions or make additional purchases of domestic and foreign individual stock leveraged products.
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