Securities firms including NH Investment and Daol Investment diagnosed on the 28th that single-stock leveraged exchange-traded funds (ETFs) for Samsung Electronics and SK Hynix amplified volatility and trading concentration in Korean stocks. The assessment followed KOSPI closing at 6755.75 on the 27th, up 65.13 points (0.97%). Analysts cited the products' impact alongside semiconductor sector dynamics and geopolitical risks, with cumulative individual net purchases reaching 14.4 trillion won and assets under management peaking at 17.6 trillion won according to Daol Investment. The diagnosis comes ahead of regulation raising the basic deposit requirement for single-stock leveraged products to 30 million won on the 31st.
NH Investment and Daol Investment Identify Volatility Expansion After Leveraged ETF Launch
NH Investment Securities analyzed in its outlook that domestic stock market volatility expanded further after the launch of single-stock leveraged ETFs. Kim Byung-yeon, an NH Investment Securities researcher, noted that sector rotation is not functioning properly in the domestic market. He stated, "When IT shows weakness, other sectors also decline together, weakening the index defense function, and inter-stock volatility has risen to record highs, continuing a structure where a small number of leading stocks determine index performance."
Daol Investment Securities provided a similar diagnosis. Cho Byung-hyun, a Daol Investment Securities researcher, stated, "It is difficult to ignore the influence created by the introduction of single-stock leveraged products in the process of expanding volatility in the domestic stock market in June-July." After the launch of leveraged ETFs, market volatility expanded further, and cumulative individual net purchases for related products reached 14.4 trillion won at one point, with related ETF assets under management increasing to a maximum of 17.6 trillion won. Cho assessed, "The effect of amplifying volatility was added to the concentration of supply on leading stocks after the launch of single-stock leveraged ETFs."
Yugin Investment Reports SK Hynix Leveraged ETF Trading Volume Exceeds Underlying Stock
The problem is that trading concentration continues around some products even after the size of leveraged ETFs has decreased. Heo Jae-hwan, a Yugin Investment Securities researcher, analyzed, "While the trading value of Samsung Electronics leveraged ETFs decreased to pre-launch levels, the trading value of SK Hynix-related products did not decrease significantly." He added, "The trading value of SK Hynix leveraged ETFs exceeds the trading value of the underlying asset, SK Hynix stock itself."
Kiwoom Securities went a step further and used the term "side effects." Han Ji-young, a Kiwoom Securities researcher, identified "side effects from single-stock leveraged supply" along with semiconductor earnings peak-out controversy as factors that increased market fatigue recently. She stated, "Volatility beyond the normal range continues as macro uncertainties such as strong oil prices and a surge in interest rates are added."
Lee Kyung-min, a Daishin Securities researcher, also mentioned that the basic deposit for single-stock leveraged products will be raised early to 30 million won from the 31st, emphasizing, "It is necessary to confirm whether supply concentration and volatility are alleviated."
Yuanta Securities Forecasts Reduced Trading Concentration After Regulation on the 31st
The market is also paying attention to whether the regulation to be implemented at the end of this month will serve as an opportunity to disperse the supply concentrated on Samsung Electronics and SK Hynix. Lee Jae-won, a Yuanta Securities researcher, forecasted, "If trading turnover and net assets decrease after single-stock leveraged regulation, rebalancing at the end of the session and procyclical supply following the stock price direction will weaken." He also stated, "A decrease in the proportion of single-stock leveraged trading leads to alleviation of Samsung Electronics and SK Hynix concentration, and can work favorably for the relatively neglected KOSDAQ."
Hana Securities also diagnosed that it is difficult to see the recent sluggishness of domestic semiconductor stocks as solely a fundamental problem. Kim Rok-ho, a Hana Securities researcher, judged that the reason domestic semiconductor companies' stock price declines were particularly larger than overseas companies despite favorable industry indicators such as memory prices and exports was "due to supply and investment sentiment rather than fundamentals."
FAQ
What regulation takes effect on the 31st for single-stock leveraged ETFs?
The basic deposit requirement for single-stock leveraged products will be raised to 30 million won on the 31st, according to Lee Kyung-min of Daishin Securities. Multiple analysts stated this regulation is expected to reduce trading turnover and alleviate supply concentration on Samsung Electronics and SK Hynix.
How much did SK Hynix leveraged ETF trading volume reach compared to the underlying stock?
Heo Jae-hwan of Yugin Investment Securities reported that SK Hynix leveraged ETF trading value exceeds the trading value of SK Hynix stock itself. He noted that while Samsung Electronics leveraged ETF trading value decreased to pre-launch levels, SK Hynix-related product trading value did not decrease significantly.
What did securities firms identify as the impact of single-stock leveraged ETFs on Korean stocks?
NH Investment and Daol Investment diagnosed on the 28th that single-stock leveraged ETFs amplified volatility and trading concentration in the domestic market. Cho Byung-hyun of Daol Investment stated cumulative individual net purchases reached 14.4 trillion won and assets under management peaked at 17.6 trillion won, with volatility expanding further after product launch.
