DistantNews
Support us
🇹🇼 Taiwan /Economy & Trade

South Korean Leveraged ETFs Skyrocket Amid New Regulations, Sparking Frenzy

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • South Korean leveraged ETFs saw significant gains on Friday, with some rising nearly 60% as the KOSPI index surged.
  • The surge occurred as new regulations increasing the margin deposit threshold for single-stock leveraged ETFs took effect.
  • Despite the new rules, trading volumes for these ETFs decreased significantly compared to previous days.

South Korean leveraged exchange-traded funds (ETFs) experienced a dramatic surge on Friday, with some products climbing close to 60% as the KOSPI index experienced a significant rally. This occurred on the same day new regulations aimed at curbing retail investor speculation went into effect.

South Korean gamblers are entering the market, trading volume is exploding, and there's an opportunity to make money. This time, we'll earn back everything we lost.

— NetizenA comment on a Taiwanese forum discussing the surge in South Korean leveraged ETFs.

The KOSPI index itself saw a substantial increase, briefly triggering a circuit breaker. Key stocks like SK Hynix and Samsung Electronics posted impressive gains, with SK Hynix jumping 29.95%. This fueled the rise in two-times leveraged ETFs, which surpassed 50% gains by the market close.

New rules implemented on Friday raised the basic margin deposit threshold for single-stock leveraged ETFs from 10 million to 30 million Korean won. The aim was to reduce excessive speculative risks among retail investors. Data from the Korea Exchange showed that ETFs tracking Samsung Electronics and SK Hynix closed higher, with gains ranging from 48% to 60%.

It's not surprising lololol

— NetizenAnother comment reflecting on the speculative nature of the South Korean market.

However, despite the sharp price increases, trading activity for these leveraged products saw a notable decline. The total trading value for 16 single-stock ETFs, including inverse products, was approximately 3 trillion won, a fraction of the previous day's 12.4 trillion won and significantly less than preceding days. The KODEX SK Hynix single-stock leveraged ETF, for instance, saw its trading volume drop from 489 million shares to 117 million shares.

If half of it is lost next week, it will be very high.

— NetizenA comment anticipating potential volatility in the leveraged ETF market.

Market analysts offered mixed views on the effectiveness of the new margin requirements. Some believe the significant drop in trading volume indicates the measures are working, while others suggest it's too early to tell, citing the strong performance of underlying stocks as a potential factor for reduced trading turnover. The surge in leveraged ETFs also sparked discussions among Taiwanese netizens, with some drawing parallels to potential speculative behavior in Taiwan's stock market.

Taiwanese people are no less.

— NetizenA comment comparing the speculative behavior in South Korea to that of Taiwanese investors.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog