As shares of Samsung Electronics and SK hynix continued to surge sharply, domestic investors flocked to overseas-listed leveraged exchange-traded funds (ETFs).
In Korea, ETFs that use a single stock as the underlying asset are not allowed. Demand from domestic investors seeking to maximize returns even at high risk appears to have concentrated buying in overseas-listed ETFs.
According to the Korea Securities Depository (KSD) securities information portal SEIBro on the 2nd, investors made net purchases totaling $4,459,267 (about 6.4 billion won) of the "CSOP SK hynix Daily 2X Leveraged" ETF over the past two weeks (the 16th–30th). During the same period, this ETF also ranked as the No. 5 net buy on the Hong Kong stock market.
This product is an ETF that tracks twice the return of SK hynix and was launched on the 16th of last month by CSOP Asset Management. Earlier, on May 28, the manager also launched the "CSOP Samsung Electronics Daily 2x Leveraged" ETF, which follows twice the return of Samsung Electronics.
The Samsung Electronics 2x product recorded total net purchases of $2,795,522 (about 4.0 billion won) over roughly five months since listing.
Shares of Samsung Electronics and SK hynix have both climbed steeply recently. SK hynix rose more than 55% in October alone, and Samsung Electronics gained 25%, hitting the "100,000 won" milestone for the first time ever.
As a result, investors in leveraged products are also expected to be posting large gains. As of the 31st of last month, the Samsung Electronics 2x leveraged ETF closed around HK$28.2 (about 5,179 won), up 262% from its listing price (HK$7.8).
On the same day, the SK hynix 2x leveraged ETF closed around HK$13.36 (about 2,454 won), up 71% from its listing price (HK$7.8).
There are also calls for additional listings of leveraged ETFs to support the growth of the domestic stock market.
Choi Gwang-hyeok, head of research at LS Securities, said at the "Market experts roundtable for a leap to the KOSPI 5000 era" held on the 30th of last month that "the stock market rises when more new ETFs are listed."
He added, "I hope ETFs with new themes will come out in Korea (like in the United States), and that leveraged ETFs will increase a bit more," and noted, "I believe (new theme ETFs or leveraged ETFs) will help grow the stock market a bit more."