Memory Chip Stocks Slide on South Korea's ETF Leverage Curbs, SK Hynix Down 14%

According to South Korea's Financial Services Commission announcement on July 16, memory chip stocks tumbled following new regulatory curbs on single-stock leverage ETFs. The Philadelphia Semiconductor Index fell over 4%, while the Memory Chip Index declined 7%. Individual stocks posted steeper losses: SK Hynix dropped 14%, SanDisk fell 12%, Western Digital fell 9%, and Seagate Technology declined over 8%.

The FSC raised minimum margin requirements from 10 million to 30 million Korean won, restricted cash-only deposits, capped single-stock leverage purchases at 20 shares per transaction, and banned new single-stock leverage products. According to JPMorgan analyst Nikolaos Panigirtzoglou, memory chip leverage ETF assets under management have declined 34% since June peak, compared to a 13% decline across all leverage equity ETFs.