Korean chip stock leveraged ETF plunges, with the largest ETF dropping more than 60% from its peak

Odaily Planet Daily reports: A new type of leveraged product tracking major South Korean chip stocks is plunging sharply, putting South Korean retail investors who prefer using such tools to pursue amplified returns at significant risk of massive losses. According to data compiled by foreign media, since its listing at the end of May, the prices of more than a dozen leveraged ETFs tracking Samsung Electronics and SK hynix have been close to being cut in half. Among them, the largest single-stock leveraged ETF, KODEX SK hynix, with assets under management of $3.4 billion, has cumulatively fallen by about 45% since its launch, dropping more than 60% from its June peak.

Jung In Yun, CEO of Fibonacci Asset Management, said: “The sharp declines of these leveraged ETFs are especially harsh for retail investors, because many seem to treat them as long-term investments rather than short-term trading tools. The huge losses from such ETFs could weaken retail investors’ willingness and ability to buy semiconductor stocks, making the market’s future recovery depend even more on foreign institutional capital inflows.” (Jin Shi)