ETF market rocked by retail buying…leverage divergence widened to 86%
On days when retail investors bought ETFs heavily, the probability that the price of the relevant security rose increased from 38% to 48%. Amid simultaneous ETF launches and rising oil prices, funds moved into renewable-energy ETFs, while net retail buying of single-stock leveraged ETFs exceeded 3 trillion won. The exchange designated SK Hynix leveraged ETFs 3 products as investment caution items, and the divergence ratio of some ETFs soared to 86%.
Retail investors’ influence in the ETF market has recently grown. The survey found that the percentage of days on which the relevant security’s price rose when retail investors bought the ETF increased from 38% to 48%. This figure shows the correlation between retail buying and short-term price movements.
Several asset managers successively launched products related to physical AI and ETFs related to Hyundai Motor. The new ETFs target exposure to specific themes and individual large corporations. Launch schedules and detailed compositions can be confirmed through disclosures by each asset manager.
Funds are flowing into renewable-energy ETFs as international oil prices rise. Products related to the energy transition are showing increases in trading volume and net assets. The holdings and weightings of the relevant ETFs can be confirmed through asset-manager disclosures.
The cumulative net purchases of single-stock leveraged ETFs by individual investors exceeded 3trillion won. These included products with high leveraged exposure to Samsung Electronics and SK Hynix. The increase in individuals’ net purchases has been accompanied by trading concentrated in specific stocks.
The Korea Exchange designated SK Hynix leveraged ETFs 3issues as investment cautionary issues. The reason for the designation was the widening gap between the underlying index and ETF prices. The exchange said it would strengthen disclosures and monitoring to protect investors.
The deviation rate was reported at up to 86% for some ETFs. Asset managers and market makers pointed to gaps in bid and ask quotes and liquidity problems. If market makers’ quotes disappear, an ETF’s trading price may diverge substantially from its underlying assets.
Through asset manager disclosures and exchange announcements, investors can check the deviation rate, net asset changes, and measures taken by asset managers for the ETFs concerned. Risk disclosures for each ETF are reflected in the investment prospectuses of securities firms or asset managers. Future disclosures and trading trends should be monitored.
This series of changes shows that structural variables in the ETF market and individual investors’ trading patterns are changing at the same time. Relevant disclosure materials and exchange announcements are key sources for investment decisions. Investors should check the management and liquidity information for each ETF directly.