In Korea's stock market, where the KOSPI fell 12% amid geopolitical conflict in the Middle East, individual investors appeared to make a "rebound bet."
As Korea's stock market plunged following U.S. and Israeli airstrikes on Iran, individual investors instead scooped up leveraged products.
According to Koscom ETF Check, on the 4th the ETF most net bought by individuals was "KODEX KOSDAQ 150 Leverage," with purchases of about 445.8 billion won.
The product in second place was "KODEX Secondary Battery Industry Leverage," with individuals net buying 434.7 billion won. "TIGER Secondary Battery TOP10 Leverage" and "KODEX Leverage" followed. Purchases of the two products were 73.8 billion won and 54.6 billion won, respectively. On this day alone, individuals bought nearly 1 trillion won of leveraged products.
Starting the day before, individuals were buying leveraged products. On the 3rd, the ETF most net bought by individual investors was "KODEX Leverage," which tracks twice the KOSPI 200 index's daily gain, with purchases of about 462.4 billion won. The product in second place was "KODEX KOSDAQ 150 Leverage," with individuals net buying 234.5 billion won. The combined net purchases of the two products were about 700 billion won.
During the same period, individual investors sold in large amounts inverse ETFs that track the KOSPI index in the opposite direction. As the KOSPI surged from the start of the year, individuals who were heavily underwater saw the index plunge in a single day due to the Middle East shock and appeared to move quickly to sell after realizing gains. In fact, the ETF most sold by individuals on the day was "KODEX 200 Futures Inverse 2X," with net sales of 910.1 billion won in just one day.
This suggests individual investors viewed the current correction phase as a "short-term pullback" and moved to invest strategically for a KOSPI rebound.
However, some noted that even a few days of steep index declines can significantly widen losses in leveraged products, urging caution when investing.
Overnight, the won-dollar exchange rate broke through the "psychological defense line" of 1,500 won, and in regular trading Samsung Electronics and SK hynix plunged 11% and 9%, respectively.
Hwang San-hae, an analyst at LS Securities, said, "Unlike the airstrikes in June last year, the goal now is a sweeping regime collapse and change, making it unlikely the conflict will end in the very short term."
He also predicted that if the war drags on and the market environment changes, the KOSPI's decline could deepen.
Hwang said, "If the Middle East war fundamentally disrupts the current AI investment cycle—through inflationary pressure, delays in artificial intelligence (AI) investment, and the like—the decline could be larger," adding, "The currently estimated 10%–15% decline assumes short-term issues such as a rate hold."
Contrary to individual investors' outlook, there are concerns that if the KOSPI's sharp decline persists, forced liquidations (margin calls) could surge. With leveraged products, even a few more days of index drops can magnify losses.
Kang Sung-jin, an economics professor at Korea University, said, "There are many risky investing behaviors, such as drawing on securities firm margin loans," adding, "Institutions are holding the line, but with the perception spreading that prices have already risen too much, the outbreak of war has led foreigners to pull out, causing a larger index drop than in other countries."