As financial authorities introduced supplementary measures for single-stock leverage products, the influx of individual investors continued unabated. On July 20, over 16.6 billion won flowed into single-stock exchange-traded funds (ETFs) based on two underlying assets.
On the same day, shares of Samsung Electronics and SK Hynix fell, leading to a broader decline in related leverage products. Samsung Electronics and SK Hynix closed down 4.31% and 4.23%, respectively.
Despite the downturn, single-stock leverage products linked to these companies saw declines ranging from 7% to 9%. The largest funds, 'KODEX SK Hynix Single-Stock Leverage' and 'KODEX Samsung Electronics Single-Stock Leverage,' dropped 8.73% and 8.98%, respectively.
Investor funds continued to flow into these products. According to the Korea Exchange, a total of 16.6 billion won was net invested in 14 single-stock leverage products on that day.
Individual investors led the charge, net buying 208.1 billion won worth of these products. They purchased approximately 141.8 billion won in seven SK Hynix single-stock leverage ETFs and 66.3 billion won in seven Samsung Electronics leverage ETFs. In contrast, institutions sold off 186.5 billion won, while foreign investors sold 4.9 billion won.
Looking at the past month, individual investors have net bought about 4 trillion won in seven SK Hynix single-stock leverage products and around 1 trillion won in seven Samsung Electronics leverage products.
However, losses have also widened. From June 19 to July 20, the stock prices of Samsung Electronics and SK Hynix fell by 32.69% and 34.30%, respectively. During the same period, single-stock leverage products based on these stocks recorded declines of 58% to 64%.
On July 16, financial authorities announced supplementary measures for single-stock leverage products aimed at curbing excessive speculative demand and raising barriers to entry for investors. Starting around August 5, the authorities will require that the basic deposit be made entirely in cash, increasing the amount from 10 million won to 30 million won. Additionally, the pre-education requirement will be extended from two hours to three hours, and the minimum trading unit will be set at 20 shares.
Meanwhile, interest from individual investors in leverage products remains strong. According to data submitted by the Financial Investment Association to Rep. Kang Myung-koo of the ruling People Power Party, the number of individuals who completed the required pre-education for investing in leverage ETFs reached 1,162,751 in the first half of this year, a 19-fold increase compared to the same period last year.
* This article has been translated by AI.
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