Retail Investors Lose 6.3 Trillion Won on Single-Stock Leveraged ETPs

Retail investors in single-stock leveraged exchange-traded products (ETPs) lost more than 6 trillion won in roughly two and a half months after the products launched, data showed. Investors in their 40s recorded the largest total losses, but the average loss per account was highest among those aged 70 and over, at about 30 million won.

According to data submitted by the Financial Supervisory Service (FSS) to Rep. Park Sung-hoon of the People Power Party, a member of the National Assembly's National Policy Committee, retail investors lost a combined 6.313 trillion won on single-stock leveraged ETPs between May 27 and Aug. 14. The figures were compiled from accounts at 10 comprehensive financial investment business operators, including Korea Investment & Securities, Mirae Asset Securities, NH Investment & Securities, Meritz Securities, Samsung Securities, KB Securities, Hana Securities, Kiwoom Securities, Shinhan Securities and Daishin Securities.

The FSS added together realized gains and losses and the valuation gains and losses on holdings relative to purchase costs for all accounts that traded single-stock ETPs at least once during the period. Of the total, realized losses from completed trades came to 2.3242 trillion won, while valuation losses on holdings amounted to 3.9888 trillion won.

By age group, investors in their 40s posted the largest total losses, with 2.053 trillion won across 165,200 accounts. Investors in their 50s followed with 1.8655 trillion won across 158,000 accounts, and those in their 30s lost 1.0912 trillion won across 117,300 accounts.

Losses per account were most severe among older investors. Those aged 70 and over lost a total of 293.4 billion won across 9,800 accounts, or an average of 29.94 million won per account. That is about 2.6 times the 11.56 million won average across all 546,000 accounts. Investors in their 60s lost 805.9 billion won across 61,000 accounts, for an average of 13.21 million won per account.

In August, valuation losses narrowed slightly while losses locked in through trading grew more sharply. Realized losses rose by 360.4 billion won, from 1.9638 trillion won at the end of July to 2.3242 trillion won on Aug. 14. Over the same period, valuation losses fell by 50.7 billion won, from 4.0395 trillion won to 3.9888 trillion won. As a result, total losses widened by 309.7 billion won, from 6.0033 trillion won to 6.313 trillion won.

The shift may partly reflect so-called stop-loss selling, in which investors dispose of holdings and accept the losses. Still, valuation losses are affected by price swings in the products themselves, and new trades can also generate losses, making it difficult to determine from this data alone what prompted the selling or whether forced liquidations occurred.