Interest in South Korea's leveraged exchange-traded funds tied to chipmakers has cooled sharply this month, with nearly $1 billion exiting the products as investor fervor for artificial intelligence trades fades and regulators step in to curb demand.
Data shows that through August, leveraged products linked to Samsung Electronics have seen outflows of $381 million, while similar funds tracking SK Hynix have lost $601 million. This marks the first monthly net redemption for such products since they debuted at the end of May.
These funds aim to double the daily price movement of individual chip stocks, a feature that has been blamed for amplifying volatility across the broader market. The turbulence became especially pronounced in July, when a global selloff in AI-related equities triggered a historic 22% plunge in South Korea's benchmark KOSPI index.
In response, South Korean regulators have raised the minimum initial deposit requirement for new investors and now mandate a five-day simulated trading period before they can access these high-risk instruments.
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