Korean and Global ETF Markets Face Changes, Highlighting Risks of Leveraged and Inverse Products
Due to the recent surge in the KOSPI, leveraged inverse ETNs and some smaller ETFs face the risk of delisting. On May 3, leveraged inverse ETNs issued by firms such as Mirae Asset and Samsung were actually delisted, and other small-scale ETFs may face a similar fate if they fail to meet net asset requirements. This has raised warnings about the risks of these products, especially as smaller ETFs may be more vulnerable to volatility than larger ones, requiring investors' caution.
Additionally, the first single-stock leveraged ETFs based on Samsung Electronics and SK Hynix will be listed on the domestic market on May 22, following the recent regulatory change that relaxed the requirement for ETFs to include at least ten underlying stocks. This move allows domestic investors to access these products without concerns about currency risk or timing differences. However, experts caution that due to the negative compounding effect of leveraged ETFs, such products are not suitable for long-term investment, as significant stock price fluctuations can amplify losses. Accordingly, there is increased emphasis on short-term trading strategies, bottom-up analysis, and the importance of investor education.
Globally listed Korean leveraged ETFs are also having a notable impact on the market. As the KOSPI surpasses the 6,800 mark for the first time and the dollar-won exchange rate falls to the 1,460 range, strong foreign buying and the growth of funds such as the Direxion Daily MSCI South Korea Bull 3X ETF (KORU) have been highlighted as key drivers. This underscores the growing influence of leveraged products on both the Korean stock market and currency movements.
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