Samsung–Hynix leveraged ETF plunges in just two days by 26%, amplifying investor losses
6Month 8day, a Samsung Electronics–SK Hynix-linked leveraged ETF plunged in just two days by 26%. Some retail investors are said to have suffered losses after making consecutive purchases, while reports of losses among investors using margin loans and leverage are increasing.
6Month 8day, the leveraged ETF linked to Samsung Electronics and SK Hynix plunged in just two days by 26%. The product is managed with the goal of delivering 2times the return of the underlying stock-price movement. The sharp decline greatly increased the short-term volatility of related products.
Some retail investors reported account losses after buying for 7consecutive trading days. Cases involving investors who bought on credit were included, making the losses feel more substantial. Losses spread rapidly as the leveraged structure overlapped with outstanding margin balances.
Investors holding margin loans and leveraged positions faced losses. Cases were reported of investors using credit, commonly called debt-financed investing, being exposed to the risk of margin calls or forced liquidation. The range of profit and loss fluctuations in individual accounts became larger than usual.
Meanwhile, some seasoned investors bought additional shares of Samsung Electronics and leveraged products during the sharp decline. Competition among leveraged ETFs is continuing as the battle for funds between asset managers intensifies. Customer inflows have shifted among asset managers that launched leveraged products.
Contrasting trends were observed by sector. AI semiconductor-related ETFs showed relative strength, with inflows reported. High-dividend stocks and financial shares rose together.
Caution is spreading in the market, and more investors are seeking hedging strategies. Overseas investors are also reportedly taking a more conservative view of the South Korean stock market. Efforts to review related products and account structures are continuing.