Korean ETF Market Sees Surge in High-Risk Leveraged and Inverse Products
The Korean exchange-traded fund (ETF) market is undergoing rapid transformation, with a notable increase in speculative behavior among investors. With the Financial Supervisory Service planning to introduce leveraged ETFs based on single stocks such as Samsung Electronics and SK Hynix, investor appetite for short-term gains and high-risk instruments is intensifying. Currently, about 90% of ETF trading volume is concentrated in leveraged and inverse products, reflecting a significant tilt toward these risky investments. Experts continue to warn of the structural risks, including high volatility and potential for substantial losses, associated with these ETFs.
Following former President Trump's strong remarks on Iran, inverse ETFs outperformed, while semiconductor and growth-stock-focused ETFs in the KOSDAQ saw declines. Notable gainers included KIWOOM 200 Futures Inverse 2X and RISE 200 Futures Inverse 2X, while commodity and real asset themes benefited from rising international oil prices. Meanwhile, capital inflows were seen in KODEX Leverage and TIGER Semiconductor TOP10 ETFs, with outflows from cash-based and index-type ETFs.
In March, oil and inverse products stood out for their impressive returns, with 'KODEX WTI Crude Oil Futures (H)' topping the list at 61.54%. The KOSPI index rebounded sharply following ceasefire signals from the U.S. and Iran, largely driven by institutional investors. Amid heightened tensions in the Middle East, individual investors dramatically reduced their overseas stock purchases, and the proposed introduction of Domestic Return Accounts (RIA) is expected to have a significant impact on overseas investment demand.
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