Korean retail investors start bottom fishing! Their targets are still "Samsung and SK Hynix leveraged ETFs"
Amid a sharp drop in Korean stocks, Korean retail investors turned contrarian, making a net purchase of over 315.4 billion KRW in leveraged products of Samsung and SK Hynix in October alone. They simultaneously spent 4.7 trillion KRW acquiring US-listed triple-leveraged semiconductor ETF (SOXL), accounting for nearly 74% of total purchases of US stocks during the same period. This marks the first rebound since tightening regulations in July and two consecutive months of net selling.
As the South Korean stock market plunged, individual investors once again flocked to leveraged products linked to Samsung Electronics and SK Hynix, betting on a rebound in semiconductor stocks. At the same time, similar funds are also making large-scale purchases of 3x leveraged semiconductor ETFs in the US market.
According to the Korea Exchange and Koscom ETF Check data, from October 1 to 23, individual investors made net purchases of 14 leveraged products linked to Samsung Electronics and SK Hynix, totaling 315.4 billion KRW. Of these, 7 products related to SK Hynix saw net purchases of 226.3 billion KRW, and 7 products related to Samsung Electronics saw net purchases of 89.1 billion KRW. This marks the first time individual investors have returned to net buying this month since regulatory tightening at the end of July led them to become net sellers.
In overseas markets, Korean investors are also actively participating. According to Korea Securities Depository data, from October 1 to 22, domestic investors made net purchases of US stocks totaling USD 4.89 billion (about 6.36 trillion KRW), with net purchases of the Direxion Daily Semiconductors Bull 3X Shares ETF (SOXL)—which tracks the US semiconductor index's daily returns by three times—reaching as high as USD 3.54764 billion (about 4.70 trillion KRW), making up 73.9% of the total net US stock purchases during that time.
First Return After Regulatory Tightening
In July this year, individual investors made massive purchases of the above 14 single-stock leveraged products, with net purchases for the month reaching 2.7728 trillion KRW. However, after regulatory authorities raised margin requirements and other measures were implemented on July 31, individual investors swiftly shifted, recording net sales of 648.4 billion KRW in August and 497.9 billion KRW in September.
Entering October, the KOSPI index has fallen cumulatively by 18.83%. Market participants believe that this sharp correction has led some retail investors to judge that stock prices are near the bottom, prompting them to return and bet on a rebound.
KODEX Series Products Become Capital Magnet
At the product level, the "KODEX SK Hynix Single-Stock Leveraged" ETF recorded net purchases of 152.9 billion KRW, ranking 11th among all listed ETFs in Korea.
In addition to single-stock leveraged products, individual investors are also making large purchases of broad-based leveraged products that track twice the gains of the blue-chip index and the semiconductor sector— "KODEX Leveraged" recorded net purchases of 1.0448 trillion KRW, and "KODEX Semiconductor Leveraged" recorded net purchases of 256.4 billion KRW, reflecting a strong expectation from retail investors for an overall rebound in the semiconductor sector.
It is worth noting that leveraged ETFs track multiples of the daily returns of their underlying assets, and if the trend moves against expectations, losses are also multiplied. Furthermore, in markets with sharp volatility and repetitive swings, even if the underlying asset price eventually returns to its original level, investors may incur actual losses due to the "negative compounding effect," meaning the risks should not be underestimated.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
