SK Hynix Leveraged ETF Falls 45%: Did Korea’s Regulator Regret Come Too Late?
South Korea’s largest single-stock leveraged ETF has misplaced almost half its worth in simply weeks, turning a red-hot chip rally into one of many market’s sharpest reversals.
The Samsung KODEX SK Hynix Single Stock Leverage fund, the most important of greater than a dozen comparable merchandise, has dropped about 45% since its late-May debut, Bloomberg-compiled knowledge present.
A Rally That Turned Into Regret
More than a dozen 2x leveraged ETFs monitoring Samsung Electronics and SK Hynix launched in Seoul in late May, pooling $3 billion in mixed belongings. Investors adopted a wave of comparable merchandise that had already taken off in Hong Kong.
The rally didn’t final. SK Hynix shares tumbled round 14% in Seoul on Monday, July 13, and the autumn pushed the KOSPI bear market slide additional, with the index now down about 25% from its report high.
Jung In Yun, chief government of Fibonacci Asset Management, said particular person merchants have absorbed many of the harm.
“The sharp decline in these leveraged ETFs has been significantly painful for retail buyers as a result of many seem to have handled them as long-term investments quite than short-term buying and selling instruments”.
A Regulator’s Rare Admission
Lee Chan-jin, governor of the Financial Supervisory Service, admitted on June 22 that regulators had authorised the leveraged ETFs too rapidly. He mentioned the approvals had been partly meant to attract retail a reimbursement from US markets and regular the gained, although the foreign money impact proved restricted.
“Maybe I ought to have lain down on the ground to dam it. I personally remorse (I didn’t).”
The admission got here days after the watchdog had already issued a warning on the merchandise. By the top of May, the ETFs had helped push retail buyers’ borrowed inventory purchases to a report 60 trillion gained ($39 billion).
Regulators authorised the funds as Korea’s KOSPI rallied greater than 110% this 12 months, on prime of a 76% surge in 2025, powered largely by Samsung Electronics and SK Hynix, which collectively make up over half the index.
Retail merchants, who drove the Samsung and SK Hynix rally and even chased the good points with financial savings and insurance coverage payouts, haven’t backed off. Leveraged and inverse Korean ETFs pulled in $3.8 billion over the previous month, Bloomberg Intelligence knowledge present, at the same time as tighter leveraged ETF rules look more and more possible.
Whether tighter oversight curbs retail urge for food for leverage, or just pushes it offshore, stays an open query.
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