Retail speculation in South Korea centered on Samsung Electronics and SK Hynix has moved from a growth driver for asset managers to a market-stability concern for regulators.
Since the country’s first single-stock leveraged products began trading on May 27, 16 single-stock exchange-traded funds and two exchange-traded notes tied to Samsung Electronics and SK Hynix have quickly turned into one of the most crowded trades in the latest Korean semiconductor rally. The products allow investors to make directional bets of roughly 2x on a single stock. Their launch coincided with rising enthusiasm around the AI memory cycle, pulling in retail money and at one point pushing total assets in South Korea’s ETF market to a record high.
Asset managers were the early winners
Fee income rose fast. Based on assets under management and fee levels, the batch of single-stock leveraged ETFs generated nearly 3.7 billion won in management fees after about two months in operation.
Samsung Asset Management captured a large share through the scale advantage of its KODEX lineup and relatively higher fees. Mirae Asset competed with lower fees to gain market share. Early local media data showed that Samsung and Mirae Asset together accounted for more than 90% of net assets in the category, with liquidity concentrating further in the leading products.
Regulators shifted focus to market stability
That fee windfall came with visible side effects.
In mid-July, South Korea’s Financial Services Commission said market value and turnover in single-stock leveraged products climbed quickly after listing, while the combined weighting of Samsung Electronics and SK Hynix in the KOSPI briefly reached 52%. Regulators also said volatility in global memory stocks had risen sharply, and that heavy swings in names such as SK Hynix and Samsung Electronics, combined with the products’ rebalancing trades, could amplify market impact.
Rules tightened from July 31
Authorities then moved to tighten access.
Starting July 31, the minimum margin requirement for retail investors buying these products was raised from 10 million won to 30 million won. The requirement must now be met in cash, with substitute securities no longer accepted. Regulators also suspended new related product listings, restricted advertising, and stepped up spread management and investor education.
Turnover dropped from earlier highs
Trading activity has already started to cool. Data from the Korea Exchange showed that, after the new rules appeared, daily turnover in the 16 single-stock leveraged and inverse ETFs fell to around 1 trillion won, down from about 10 trillion to 12 trillion won previously. At peak levels, turnover had reached 15 trillion to 20 trillion won.
On Aug. 3 and 4, daily turnover in the products was around 1 trillion won. By Aug. 5, it had slipped to 919.8 billion won, the first drop below 1 trillion won. Trading has shown a modest rebound more recently, with turnover in the 16 ETFs at about 7.45 trillion won on July 27.