Leverage ETFs Targeting Samsung Electronics and SK Hynix to Launch in Korea
Korean financial regulators have approved the launch of single-stock leveraged ETFs based on Samsung Electronics and SK Hynix, the nation’s leading market cap companies. The new regulation allows such ETFs only for underlying stocks that represent at least 10% of the total market capitalization, a measure designed to contain potential volatility. Leading asset management firms such as Samsung Asset Management and Mirae Asset are preparing to launch these products as early as next month.
While this regulatory change aligns Korea with practices seen in international markets and is expected to attract new investment flows, concerns remain about increased market volatility due to these high-risk instruments. Around 90% of recent ETF trading volumes in Korea have been dominated by leveraged and inverse products, highlighting strong retail investor interest. However, experts warn about the structural risks inherent in single-stock leveraged ETFs, cautioning investors of the potential for significant losses.
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