South Korea's Single-Stock Leverage ETF Trading Plunges 89.8% on August 5 as Investors Shift to U.S. Alternatives

According to Korea Exchange data, domestic single-stock leverage exchange-traded funds (ETFs) saw trading volumes plummet 89.8% on August 5 following government regulations that increased minimum deposit requirements to 30 million won in cash and restricted investment limits. Combined trading value for 16 listed single-stock leverage and inverse ETFs fell from 13.6 trillion won on July 15 to 1.3 trillion won on August 4.

Meanwhile, domestic investors rapidly shifted capital to U.S.-listed leverage ETFs. Top net purchases included SOXL (3x semiconductor ETF) at $248.8 million, TSLL (2x Tesla leverage ETF) at $21.4 million, and KORU (3x Korean equity leverage ETF) at $13.1 million. Analysts noted the policy created a "balloon effect" where investors moved to higher-risk overseas products with less regulatory oversight.