BlockBeats report: 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 significantly declined.
The KODEX single-stock ETF tracking SK Hynix is one of South Korea’s largest single-stock leveraged ETFs, and its trading volume dropped to 59 million shares on Monday, the lowest level since June 4. Another similar ETF linked to Samsung Electronics also recorded its lowest trading volume since its launch at the end of May.
Peter Park, Sales Assistant for Korean Equities at NH Investment & Securities, said: “Speculative leverage bubbles in major tech stocks have been deflated on both the upside and downside, as retail investors can freely sell existing positions but face high cash thresholds for new purchases, effectively ending speculative leveraged trading by retail investors.”
Previously, South Korean regulators raised the minimum cash margin requirement for single-stock leveraged ETF investors from KRW 10 million to KRW 30 million. Compared to the trading volume of KRW 1.24485 trillion on the last trading day before the measure took effect (July 30), trading volume for these products has now declined to approximately one-tenth.