Single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix plunged 12-13% on May 7, with 13 of 14 products falling below their 20,000 won listing price, according to Korea Exchange and KOSCOM CHECK data. The decline mirrored 6% drops in the underlying stocks, amplified by the 2x leverage structure. Market volatility concerns intensified as these products accounted for over one-third of total ETF trading volume, prompting Deputy Prime Minister Koo Yoon-chul to state the government is discussing supplementary measures to address leveraged ETF risks.
Samsung and SK Hynix Leveraged ETFs Record Intraday Lows
All seven Samsung Electronics single-stock leveraged ETFs fell approximately 13%, while seven SK Hynix products dropped around 12% on May 7. KODEX Samsung Electronics Single Stock Leverage closed at 18,310 won, down 13.71%, and KODEX SK Hynix Single Stock Leverage finished at 22,130 won, down 12.56%. TIGER Samsung Electronics and SK Hynix Single Stock Leverage declined 13.88% and 12.44% respectively.
Intraday declines reached approximately 20%. KODEX Samsung Electronics Single Stock Leverage fell to 17,100 won during trading, its second-lowest intraday price after hitting 17,000 won on May 2. TIGER Samsung Electronics Single Stock Leverage dropped to 15,705 won, also its second-lowest level after 15,525 won on May 2. KODEX SK Hynix Single Stock Leverage recorded an intraday low of 19,685 won, while TIGER SK Hynix Single Stock Leverage hit 16,645 won — both marking their third-lowest levels since listing.
Only KODEX SK Hynix Single Stock Leverage remained above the 20,000 won listing price among the 14 products.
Inverse Products Gain Over 10% on Underlying Stock Declines
Inverse 2x products that profit from underlying stock declines rose over 10% on May 7. SOL SK Hynix Futures Single Stock Inverse 2X gained 11.84% to close at 9,355 won. PLUS Samsung Electronics Futures Single Stock Inverse 2X climbed 12.68% to finish at 14,085 won.
Leveraged ETF Trading Volume Reaches 13 Trillion Won
The 16 single-stock leveraged products (including inverse) recorded total trading value of 13.01 trillion won on May 7, exceeding one-third of the entire ETF market's 36.05 trillion won in trading volume, according to Korea Exchange data.
The sharp decline in single-stock leveraged ETFs, combined with drops in Samsung Electronics and SK Hynix — the two largest companies by market capitalization on the KOSPI — contributed to vertical declines in the KOSPI index. The market triggered a side car (temporary suspension of program sell orders) in the morning and a circuit breaker (temporary trading halt) in the afternoon as losses deepened. The index reduced some losses before market close following low-price buying after an 8% plunge.
Net Asset Value Declines 15.3% from Peak
The 16 single-stock leveraged products' total net asset value stood at 14.91 trillion won as of May 6, down 15.3% from 17.60 trillion won on May 25, according to market data. Kim Seok-hwan, researcher at Mirae Asset Securities, stated that net asset value has decreased by nearly 3 trillion won from its peak, recording net losses. He noted that while net inflows for KODEX and TIGER — the products with the largest net asset values — have gradually increased, valuation losses reached approximately 400 billion won for Samsung Electronics products and approximately 600 billion won for SK Hynix products.
Investor community discussions reflected concerns about capital erosion. Leveraged products face risks from leverage effects that amplify losses with small investments and negative compounding effects that erode principal when underlying stock prices fluctuate.
Deputy PM Koo Announces Government Discussions on Supplementary Measures
Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul stated during a National Assembly Strategy and Finance Committee plenary session on May 7 that the government is aware of concerns about leveraged ETFs bringing significant volatility to the stock market. Koo said discussions are underway on how to supplement and minimize such problems.
FAQ
What happened to Korean single-stock leveraged ETFs on May 7?
Single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix fell 12-13% on May 7, with 13 of 14 products dropping below their 20,000 won listing price. Intraday declines reached approximately 20%, with KODEX Samsung Electronics Single Stock Leverage closing at 18,310 won (down 13.71%) and KODEX SK Hynix Single Stock Leverage finishing at 22,130 won (down 12.56%).
How much trading volume did leveraged ETFs account for on May 7?
The 16 single-stock leveraged products recorded total trading value of 13.01 trillion won on May 7, exceeding one-third of the entire ETF market's 36.05 trillion won in trading volume, according to Korea Exchange data.
What did the Korean government say about leveraged ETF risks?
Deputy Prime Minister Koo Yoon-chul stated on May 7 that the government is aware of concerns about leveraged ETFs bringing significant market volatility and that discussions are underway on how to supplement and minimize such problems.
