Clipart Korea
“I came here in person because I wanted to buy as soon as the market opened today, but I hadn’t completed the training registration. I called the customer center, but they said it would take more than an hour.”
At a securities firm investment center in Yeouido, Seoul, on the morning of Wednesday, an investor in his 60s identified as A, who visited to trade single-stock leverage products on Samsung Electronics (005930.KS) and SK hynix (000660.KS), stamped his feet as a staff member checked his training completion records. “I took the basic pre-training in advance, but I only later realized that a separate advanced course was required,” A said. “Even after rushing to complete the training, approval didn’t come through, so I ended up coming to the branch in person.”
As Korea’s first single-stock leverage and inverse 2x (gop-bus) products tracking Samsung Electronics and SK hynix were listed Wednesday, securities firm trading floors and customer centers were flooded with inquiries about pre-training registration. To invest in these products, investors must complete dedicated single-stock pre-training in addition to the existing training for leveraged exchange-traded products (ETPs).
The Korea Financial Investment Association’s training website crashed as users flocked to it simultaneously. As of the previous day, 212,000 had applied for the pre-training and 193,843 had completed it.
According to the Korea Exchange (KRX), a total of 18 products were simultaneously listed on the Korea Stock Exchange, including 16 single-stock leverage and inverse 2x products and two leveraged exchange-traded notes (ETNs) based on Samsung Electronics and SK hynix as underlying assets. The highest return was posted by ‘1Q SK hynix Futures Single-Stock Leverage’ at 19.46%, while ‘SOL SK hynix Futures Single-Stock Inverse 2X’ marked the lowest at -18.70%.
Immediately after listing, product prices fluctuated sharply, triggering both static and dynamic volatility interruptions (VIs) across all issues. A static VI is triggered when prices move ±10% or more from the previous day’s close, while a dynamic VI is triggered intermittently during short-term sharp moves from the most recent traded price (or reference price). When a VI is triggered, the relevant stock or product switches to single-price trading for two minutes.
In particular, some SK hynix single-stock leverage products soared to the daily price limit in early trading. The surge resulted from a combination of a futures market rally, a KOSPI buy sidecar, and a flood of investor orders, which led to trades being executed at prices well above net asset value (NAV).
“Buy orders piled up all at once during a time slot when liquidity providers (LPs) had no obligation to submit quotes,” an asset management official said. “Momentary gaps in the bid-ask spread caused some product prices to spike excessively.”
Korea Financial Investment Association website. Yonhap News
Park Seung-jin, a researcher at Hana Securities, explained, “If bid and ask quotes are not sufficiently formed, ‘slippage’ losses can occur as trades fail to execute at desired prices. The more frequent the short-term trading, the higher the potential burden of such transaction costs.”
Retail funds also poured in heavily on the listing day. Funds were concentrated in Samsung Asset Management and Mirae Asset Global Investments products in particular, reflecting a preference for major firms. By individual net buying, Mirae Asset’s ‘TIGER SK hynix Single-Stock Leverage’ led with 690.8 billion won, followed by Samsung Asset Management’s ‘KODEX SK hynix Single-Stock Leverage’ (667.3 billion won) and ‘KODEX Samsung Electronics Single-Stock Leverage’ (315.5 billion won).
Investment also flowed into inverse 2x products betting on declines in semiconductor stocks. ‘SOL SK hynix Futures Single-Stock Inverse 2X’ and ‘PLUS Samsung Electronics Futures Single-Stock Inverse 2X’, which seek to deliver twice the inverse of the daily returns of Samsung Electronics and SK hynix futures, attracted 35 billion won and 2.7 billion won in retail funds, respectively.
Experts raised concerns about overheating. A private banker (PB) handling ultra-high-net-worth clients in Banpo-dong, Seocho-gu, Seoul, said, “What’s worrying on the ground is that investors don’t fully understand these products. Many overlook the fact that if the underlying asset falls, losses can also double.”
Some in the securities industry argue that the listing of these single-stock leverage products is creating a so-called ‘wag the dog’ phenomenon, in which demand for the underlying semiconductor heavyweights is being pulled higher in turn. The explanation is that as retail investors aggressively buy leverage products on expectations of a semiconductor super-cycle, asset managers must purchase additional spot stocks and futures to track returns, increasing upward pressure on share prices.