SEOUL, October 21 (AJP) -South Korean retail investors accumulated more than 6.3 trillion won ($4.9 billion) in realized and unrealized losses on leveraged and inverse products tied each to Samsung Electronics and SK hynix within two and a half months of their launch.
Their misfortunes likely have deepened over the last two months as Samsung Electronics shares have fallen 15 percent and SK hynix shares 23 percent since September.
Investors in their 40s and 50s accounted for nearly 4 trillion won of the losses, according to data released Wednesday by Rep. Park Sung-hoon of the People Power Party (PPP), a member of the National Assembly’s National Policy Committee.
The figures cover trading from the products sold by 10 brokerages from May 27 to Aug. 14 and excludes the July-October crash.
Single-stock exchange-traded products, or ETPs, allow investors to magnify exposure to an individual stock or bet on its decline and were introduced to follow the top two chipmakers during the peak of AI chip rally.
Of the total, 2.3242 trillion won represented losses crystallized through trading. Another 3.9888 trillion won, or 63.2 percent, consisted of unrealized losses on holdings.
Realized losses rose rapidly in early August, increasing by 360.4 billion won from the end of July through Aug. 14.
Unrealized losses narrowed by 50.7 billion won over the same period, leaving combined losses 309.7 billion won higher.
Investors in their 40s suffered the largest losses by age group: 2.053 trillion won across 165,200 accounts. Those in their 50s lost 1.8655 trillion won across 158,000 accounts, followed by investors in their 30s with 1.0912 trillion won in losses.
Together, investors in their 40s and 50s accounted for about 62 percent of total losses.
Older investors sustained the heaviest losses per account. Those aged 70 and above lost an average of about 29.94 million won across 9,800 accounts, roughly 2.6 times the overall average of 11.56 million won across 546,000 accounts. Investors in their 60s lost an average of 13.21 million won per account.
Authorities tightened access to single-stock leveraged products as concerns over investor risk mounted. On July 31, they raised the minimum deposit requirement for ordinary retail investors from 10 million won to 30 million won. Mandatory simulated trading followed on Aug. 19.
Questions over the approval process sharpened after FSS Governor Lee Chan-jin acknowledged during an Oct. 19 parliamentary audit that parts of the review had been accelerated to meet a timetable.
He also acknowledged that the FSS had unusually begun reviewing securities registration statements before the Korea Exchange completed its preliminary listing review.
FSS labor union on Wednesday blamed a supervisory structure subordinate to government financial policy and called for oversight of the watchdog to be transferred from the Financial Services Commission (FSC) to the National Assembly.
“Even when financial policies pursued by the administration have side effects or problems, there are structural constraints that make it difficult to voice an independent opinion for fear of institutional disadvantages, including budgetary penalties,” the union said in a statement.
It said the watchdog lacks the authority to make or amend supervisory regulations or formally place items on the FSC’s agenda, limiting its ability to respond when problems emerge.
When consumers suffer losses, the union argued, the FSS bears responsibility for supervisory failures, which in turn invites tighter control over the agency.
The union called for the FSC’s powers to oversee the FSS and approve its budget to be transferred to the National Assembly. It also sought parliamentary confirmation hearings for nominees to lead the watchdog.
Copyright ⓒ Aju Press All rights reserved.