Photo unrelated to the article content. Clipart Korea
Single-stock leverage exchange-traded funds (ETFs) that track twice the daily price movements of Samsung Electronics and SK hynix plunged on the 28th. Their prices tumbled to less than half their listing prices.
According to the Korea Exchange (KRX) and other sources on the 29th, single-stock leverage ETFs tied to Samsung Electronics and SK hynix plunged by around 28% and 26%, respectively, in the previous session. KODEX SK hynix Single-Stock Leverage, which has the largest net assets, closed at 9,930 won, down 28.43%, while the TIGER product of the same type ended at 8,345 won, down 28.92%. On a closing-price basis, these were the lowest levels since listing.
Samsung Electronics single-stock leverage products from KODEX and TIGER also ended at 9,415 won and 8,660 won, retreating 26.90% and 26.67%, respectively. The sharp declines followed the 14.65% and 13.39% plunges in the underlying shares of SK hynix and Samsung Electronics on the main bourse.
The prices of these 14 single-stock leverage products fell to less than half their listing prices in just two months. In the case of KODEX SK hynix Single-Stock Leverage, the listing price was 23,450 won, but with its close at 9,930 won on this day, the decline reached 57.65%.
The TIGER product of the same type (closing at 8,660 won) posted a decline of 58.24% from its listing price of 19,985 won, while the Samsung Electronics leverage products of these two brands plunged 56.48% and 56.65% from their listing prices, respectively.
SOL SK hynix Futures Single-Stock Inverse 2X, which delivers twice the returns of SK hynix’s share price decline, rose 29.10% on this day to close at 14,530 won. However, its decline from the listing price of 20,005 won stood at 27.37%.
Among the 16 products, only PLUS Samsung Electronics Futures Single-Stock Inverse 2X closed at 21,160 won on this day, up 26.86%, posting a gain from its listing price of 20,000 won.
Amid this situation, individual investors continued net buying on this day, purchasing 419.9 billion won and 152.3 billion won worth of KODEX and TIGER SK hynix Single-Stock Leverage, respectively. Over the past two months through this day, individual net buying of the 14 leverage products, excluding the two inverse products, reached 14.7059 trillion won.
As market volatility increased following the launch of the leverage products, financial authorities rolled out remedial measures on the 16th of this month, 50 days after the launch. The government will raise the basic deposit for single-stock leverage products from the current 10 million won to 30 million won, starting on the 31st. This means investors must hold more than 30 million won in cash to make new investments in or additional purchases of Samsung and SK hynix leverage products.
The KOSPI’s plunge is shaking as severely as during the foreign exchange crisis.