South Korean Leveraged Chip ETFs Record First Outflow Since Launch

Leveraged exchange‑traded funds (ETFs) that track South Korea’s two largest chipmakers experienced a net outflow of close to $1 billion in August, the first monthly withdrawal since the products launched in late May.

Outflow Details

Bloomberg Intelligence data shows $601 million left the SK Hynix‑linked leveraged fund, while the Samsung‑linked product lost $381 million. These ETFs aim to deliver twice the daily price movement of the underlying stocks.

Market Context

July was a difficult month for Korean equities: the KOSPI fell 22 %, Samsung Electronics dropped 21.5 %, and SK Hynix slid 35.5 %. The sharp declines prompted an emergency meeting of officials after 864.5 trillion won exited the market over two sessions. Lawmakers cited single‑stock leveraged ETFs as amplifying the sell‑off.

Regulatory Response

Regulators responded by raising the minimum deposit required for new investors and mandating a five‑day mock‑trading period before participation. Following these measures, trading volumes in the leveraged ETFs cooled sharply.

Shift in Retail Preference

Retail investors have been moving toward equity‑linked securities (ELS) that offer annualized coupons of 40 %–50 %. In July, about 3.5 trillion won (≈$2.5 billion) of ELS products were sold, the highest monthly total since April 2023, with many notes tied to Samsung and SK Hynix.

Recent Stock Performance

Both chipmakers have steadied in August: Samsung rose 3.63 % for the month, while SK Hynix gained 2.19 %. However, Samsung fell 8.7 % on a single day after a shareholder‑return plan disappointed investors.