A view of Seoul’s Yeouido financial district. Yonhap News
Investors in their 40s bought the most single-stock leveraged exchange-traded funds after South Korea tightened rules on the products on July 31, according to a brokerage analysis. The buying was concentrated among people in their 40s, who have relatively more cash on hand, after the minimum deposit requirement was raised from 10 million won to 30 million won in cash.
The Seoul Economic Daily commissioned a brokerage to analyze net purchases by age group among about 3 million individual clients from July 31, the first day the tighter rules took effect, through the 20th of this month. Investors in their 40s recorded the largest total net purchases, buying 14.87 billion won ($10.7 million) worth of the products. Those in their 50s and 30s bought 7.87 billion won and 5.37 billion won worth, respectively. Net purchases came to 3.66 billion won for those in their 60s, while those in their 20s (1.53 billion won) and those aged 70 and over (1.59 billion won) bought similar amounts. The buying was concentrated among people in their 40s and 50s, who have relatively more cash liquidity, after the deposit rule was tightened. “The relative financial comfort of people in their 40s and 50s appears to have played a role,” a brokerage official said.
By per-investor net purchases, those in their 70s, 20s and 40s ranked highest. Those aged 70 and over bought 29.98 million won each, followed by 27.39 million won for those in their 20s and 27.04 million won for those in their 40s. Given that 53 clients aged 70 and over and 550 clients in their 40s bought single-stock leveraged products during the period, older investors placed larger individual bets on single-stock leveraged ETFs. Those in their 30s bought 15.7 million won each, while those in their 60s and 50s bought 14.47 million won and 13.71 million won, respectively.
Since the rules took effect, daily turnover in the 14 single-stock leveraged ETFs, excluding inverse products, has fallen sharply. According to the Korea Exchange, daily turnover in the 14 funds averaged 9.29 trillion won from May 27, when the first product launched this year, through July 30. By contrast, daily turnover averaged 872.4 billion won between July 31, when the rules took effect, and August 21, a plunge of 90.6% from before the regulation. Net purchases may vary by age group, but overall buying is declining because of the tighter rules, analysts said.