South Korea's regulatory measures reduce leveraged ETF trading volume

Huo Xing Finance reports that on August 4, following regulatory measures by South Korean authorities to curb demand for leveraged ETFs that had recently fueled sharp market volatility, trading volumes for leveraged ETFs linked to South Korea’s two major chip giants plummeted. The KODEX single-stock ETF tracking SK Hynix, one of South Korea’s largest single-stock leveraged ETFs, saw its daily volume drop to 59 million shares on Monday—the lowest level since June 4. Similarly, another leveraged ETF tied to Samsung Electronics recorded its lowest trading volume since its launch at the end of May. Peter Park, Assistant Head of Korean Equity Sales at NH Investment & Securities, stated: “Speculative leverage bubbles in major tech stocks have been deflated on both the upside and downside. With investors able to sell existing positions without restriction but facing high cash entry barriers for new purchases, speculative leveraged trading by retail investors has effectively ended.” Previously, South Korean regulators raised the minimum cash margin requirement for single-stock leveraged ETF investors from 10 million KRW to 30 million KRW. Compared to the trading volume of 12.4485 trillion KRW on the last trading day before the measures took effect (July 30), current trading volumes for these products have fallen to approximately one-tenth of that level.