Retail investors posted their first monthly net buying of single-stock leveraged exchange-traded funds since regulators tightened investment rules in late July. As South Korean equities tumbled, demand revived for bets on a rebound in large-cap chipmakers such as Samsung Electronics and SK hynix.
Individual investors bought a net 315.4 billion won ($221 million) worth of 14 single-stock leveraged ETFs tracking Samsung Electronics (005930.KS) and SK hynix (000660.KS) between the 1st and the 23rd of this month, according to the Korea Exchange on the 25th. Seven funds linked to SK hynix drew 226.3 billion won, while seven tied to Samsung Electronics attracted 89.1 billion won.
It marked the first shift to monthly net buying since the rules were tightened in late July. Retail investors had bought a net 2.77 trillion won of the 14 single-stock leveraged ETFs in July, but turned net sellers after requirements including minimum investor deposits were strengthened on July 31. They sold a net 648.4 billion won in August and 497.9 billion won in September before returning to the buy side this month.
By product, the KODEX SK hynix Single Stock Leverage ETF drew 152.9 billion won in net retail buying, the 11th-largest amount among all ETFs listed in South Korea. Beyond single-stock products, the KODEX Leverage and KODEX Semiconductor Leverage ETFs took in 1.04 trillion won and 256.4 billion won, respectively. With the KOSPI plunging 18.83% over the same period, bargain hunters betting on a rebound in the index and in large-cap chip stocks appear to have flocked to high-multiple products.
Foreign investors took a different tack. Over the same period, they bought a net 148.3 billion won of the KODEX Leverage ETF while also purchasing 51.3 billion won of the KODEX 200 Futures Inverse 2X, a product that delivers twice the inverse of the KOSPI 200 index's daily return. They sold a net 48.8 billion won of the 14 single-stock leveraged ETFs, unloading 50.8 billion won of SK hynix-linked products while buying a net 2 billion won of Samsung Electronics-linked funds.
"We have seen strong buying of leveraged ETFs on expectations of an index rebound following the sharp drop in domestic equities," said Han Su-jin, senior researcher at Samsung Securities.
