Single-stock leveraged ETFs attract over $7 billion on launch day; education site crashes

A surge of over 10 trillion won ($7.3 billion) flooded into newly launched single-stock leveraged Exchange Traded Funds (ETFs) tracking Samsung Electronics and SK Hynix on their debut trading day, May 27. These high-risk products, which aim to follow the daily returns of the underlying stocks by a factor of plus or minus two, saw immediate and intense investor interest.

Four SK Hynix leveraged ETFs experienced dramatic price increases, briefly surging by nearly 60% shortly after the market opened. The total trading volume for all 16 single-stock leveraged ETFs listed that day amounted to 10.418 trillion won, representing a significant 23% of the total ETF trading volume in the South Korean stock market. Retail investors were particularly active, with a net purchase of 2.0482 trillion won in these leveraged ETFs.

In contrast, seven leveraged ETFs tracking Samsung Electronics' daily returns with a 2x multiplier saw more modest gains, closing between 4.79% and 5.97% higher, mirroring Samsung Electronics' 2.68% rise for the day. The high volatility across all 16 single-stock leveraged ETFs triggered the circuit breaker mechanism (Volatility Interruption, VI) multiple times, temporarily halting trading to curb rapid price swings.

The immense investor demand also overwhelmed the online education platform operated by the Korea Financial Investment Association, which is mandatory for investors before trading these leveraged ETFs. The website, providing a required two-hour online course, experienced a system crash with over 9,000 users attempting to access it simultaneously. Although the system partially recovered later in the afternoon, intermittent connection issues and slow speeds persisted, frustrating investors eager to trade these high-risk instruments.