South Korea’s largest single-stock leveraged ETF has lost nearly half its value in just weeks, turning a red-hot chip rally into one of the market’s sharpest reversals.

The Samsung KODEX SK Hynix Single Stock Leverage fund, the biggest of more than a dozen similar products, has dropped about 45% since its late-May debut, Bloomberg-compiled data show.

A Rally That Turned Into Regret

More than a dozen 2x leveraged ETFs tracking Samsung Electronics and SK Hynix launched in Seoul in late May, pooling $3 billion in combined assets. Investors followed a wave of similar products that had already taken off in Hong Kong.

The rally did not last. SK Hynix shares tumbled around 14% in Seoul on Monday, July 13, and the fall pushed the KOSPI bear market slide further, with the index now down about 25% from its record high.

Jung In Yun, chief executive of Fibonacci Asset Management, said individual traders have absorbed most of the damage.

“The sharp decline in these leveraged ETFs has been particularly painful for retail investors because many appear to have treated them as long-term investments rather than short-term trading tools”.

A Regulator’s Rare Admission

Lee Chan-jin, governor of the Financial Supervisory Service, admitted on June 22 that regulators had approved the leveraged ETFs too hastily. He said the approvals were partly meant to draw retail money back from US markets and steady the won, though the currency effect proved limited.

“Maybe I should have lain down on the floor to block it. I personally regret (I didn’t).”

The admission came days after the watchdog had already issued a warning on the products. By the end of May, the ETFs had helped push retail investors’ borrowed stock purchases to a record 60 trillion won ($39 billion).

Regulators approved the funds as Korea’s KOSPI rallied more than 110% this year, on top of a 76% surge in 2025, powered largely by Samsung Electronics and SK Hynix, which together make up over half the index.

Retail traders, who drove the Samsung and SK Hynix rally and even chased the gains with savings and insurance payouts, have not backed off. Leveraged and inverse Korean ETFs pulled in $3.8 billion over the past month, Bloomberg Intelligence data show, even as tighter leveraged ETF rules look increasingly likely.

Whether tighter oversight curbs retail appetite for leverage, or simply pushes it offshore, remains an open question.

Source: BeInCrypto