Individual investors have rushed to buy leveraged exchange-traded funds (ETFs). The KOSPI sank to the 3,800 level amid uncertainty over U.S. rate cuts and talk of an artificial intelligence (AI) bubble, but investors expect it to soon regain the 4,000 level.
According to the financial investment industry on the 23rd, "KODEX Leverage" ranked No. 1 in net purchases by individual investors last week (the 17th–21st). The ETF, which tracks twice the daily return of the KOSPI200 index, recorded net purchases of about 134 billion won.
In addition, "KODEX 200" (620 billion won in net purchases), which is managed so that the rate of change in net worth per unit is similar to the KOSPI200 index, ranked third in net purchases. "KODEX KOSDAQ150 Leverage" (41 billion won), which tracks the KOSDAQ index, also ranked seventh.
It was a week of turbulence across global stock markets, but small investors are assessed to have used the volatile conditions as an opportunity to make big bets on an index rebound. The KOSPI plunged more than 3% on the 18th, losing the 4,000 level, rose on the 20th, and fell again on the 21st.
In fact, individual investors sold index decline ETFs last week. "KODEX 200 Futures Inverse 2X" ranked No. 1 in net sales last week, with 122 billion won sold on a net basis. Individual investors also net sold 19 billion won of "KODEX Inverse."
Brokerages are warning that investors should be cautious with leveraged products or the so-called "double inverse," known as inverse 2X ETFs. If the direction goes against them, losses can accumulate significantly, making it difficult to recover the return.
The likelihood that a volatile market will persist for some time is also a burden. The research center at Samsung Securities said in an intraday emergency market assessment the previous day, "Given that the KOSPI surged to 4,200 in September–October, we view this as a short-term price adjustment phase."