Leveraged assets linked to SK Hynix and Samsung have become one of the most fragile structural risks in the Korean market over the past few months, and this claim strongly aligns with real data.

These assets were first approved in April 2026, launched as Korea's first individually-owned leveraged and inversely leveraged ETFs. Interest was truly explosive, with asset size soaring from around $3 billion to over $9 billion in just a few months after launch. 92% of the holders of these assets are individual investors, meaning they are almost entirely retail-based, not institutional.

The real concern lies in their share of the daily trading volume. According to the central bank's own statement, SK Hynix and Samsung account for more than 55% of KOSPI's market capitalization and more than 63% of its total trading volume, adding leveraged assets to an already highly concentrated structure. According to separate calculations by UBS and Barclays, rebalancing transactions during sharp declines can account for between 17% and 60% of SK Hynix's daily volume, while for Samsung, this figure ranges from 10% to 31%. On June 23rd, leveraged ETFs linked to these two stocks saw approximately $6 billion in mechanical sales in a single session, representing 14% of the day's total trading volume.

Understanding how this mechanism works is crucial. Leveraged ETFs must rebalance at the end of each session to maintain their target exposure, meaning they buy more when the stock rises and sell when it falls. Normally, this has a small impact, but for stocks like SK Hynix and Samsung, which already represent a very large portion of the market, the rebalancing transactions themselves begin to amplify the price movement when the size of the leveraged products is so large compared to the daily volume. They become forced sellers on downturns and forced buyers on upturns, artificially amplifying natural volatility.

The central bank also issued a separate warning, combining this with record-high margin debt: the average margin debt balance reached 35.94 trillion won in the second quarter, approximately $23.5 billion, a record quarterly figure. In the central bank's own words, in the event of a sharp price correction, both forced liquidations resulting from margin calls and increased repurchase demands from leveraged ETFs can simultaneously trigger and amplify volatility. Last week's events served as a small preview of this, with the KOSPI plummeting 10% in one day, followed by a further 5.8% drop on another day, triggering circuit breakers for the fifth time – almost half of an event that has only occurred 11 times in total since 2000 – happening in 2026 alone.

This chart points to a truly different level of structural risk when compared to names like Micron and Tesla, as the leveraged asset size relative to daily volume hasn't reached such an extreme level in those companies. For those tracking Korean market-linked assets through Gate, the key question is whether regulators will impose additional restrictions on these assets, as the current structure has the potential to become a self-reinforcing spiral of volatility on any sharp downturn.

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