Retail investors in South Korea are estimated to have lost 2.3 trillion won ($1.7 billion) from leveraged exchange-traded products tracking Samsung Electronics Co. and SK Hynix Inc. between May 27 and Aug. 14, according to opposition lawmaker Choi Eun-seok’s office. Clients of 10 Korean brokerages incurred the losses from single-stock ET Fs and notes tied to the two chipmaking giants. Since their launch in May, the single-stock products have intensified volatility in Korea’s AI-centric stock market, where leveraged bets propelled it into one of the world’s top performers before backfiring.
The wild swings caused by the risky products have prompted regulators to cool the fervor among mom-and-pop investors, resulting in a plunge in trading volume. The data came from the Financial Supervisory Service, which collated information from brokerages including Mirae Asset Securities Co., Kiwoom Securities Co., Samsung Securities Co. and NH Investment & Securities Co. Since July, authorities implemented measures including a temporary ban on new listings of the leveraged single-stock products, higher minimum cash deposits, and training requirements for investors. These actions marked an about-face after regulators introduced the products in May, partly aimed at deterring local investors from piling into similar ET Fs listed overseas.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing