Samsung Electronics Up 0.81%, But 2x Leveraged ETF Down 10.75% Since May 27 Launch

According to Financial News, individual investors who purchased 2x leveraged single-stock ETFs linked to Samsung Electronics and SK Hynix since their May 27 listing have experienced unexpected losses despite gains in the underlying stocks. Between May 27 and July 3, Samsung Electronics rose 0.81%, but the KODEX Samsung Electronics 2x Leveraged ETF fell 10.75%; SK Hynix gained 8.11%, yet the corresponding 2x leveraged product lost 1.35%.

The mismatch occurs because leveraged ETFs reset daily based on each day's price change rather than tracking cumulative gains over time. When underlying stocks fluctuate, daily rebalancing creates a negative compounding effect: a 20% loss requires a 25% gain to recover. South Korea's financial authorities warned before launch that 2x leveraged products could theoretically experience a maximum single-day loss of 60%, and illustrated that if a stock rises 30% then falls 30%, a 2x leveraged product would lose 36% compared to 9% for a standard product.