High-Risk ETFs Dominate Korean Market Amid Growing Volatility Concerns
In the Korean ETF market, high-risk products such as leveraged and inverse funds have surged to comprise 89.5% of total trading volume, indicating a strong appetite for aggressive investment strategies among local investors. The forthcoming launch of leveraged ETFs based on major stocks like Samsung Electronics and SK Hynix is expected to further intensify this trend. Meanwhile, the total market capitalization and net assets of domestic ETFs have surpassed 400 trillion KRW, fueled by the semiconductor-driven rally and robust investor participation since the latter half of last year.
However, industry experts are raising concerns that increasing concentration in leveraged ETFs could heighten market-wide volatility, as such products have the potential to amplify price swings of the overall index during turbulent periods. The growing share of ETF-related trading, alongside significant inflows from long-term funds such as retirement pensions, is contributing to both market growth and volatility risks. To mitigate possible adverse effects from these high-risk instruments, several voices in the securities industry are calling for stricter entry requirements and enhanced risk management practices.
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"Leverage or Inverse"... 'Heads or Tails Betting' Swallowing 90% of ETF Trades - Daily NewsAccording to Daily News by reporter Jung Soo-yeon | A strong trend towards high-risk products such as leverage and inverse is appearing in the domestic Exchange-Traded Fund (ETF) market. Nearly 90% of the total trading volume is concentrated in high-risk products, indicating that the bold directional betting of investors with so-called 'hearts of a beast' is becoming a new investment inertia in the market. On the 16th, data from the Korea Exchange and the financial investment industry showed that recently, the proportion of leverage and inverse products in the total domestic ETF trading volume reached 89.5%. Last year, the average daily trading volume of high-risk ETFs recorded 540.23 million shares, accounting for 72.7% of the total.