The United States and Iran agreed to a two-week truce, but uncertainty in the domestic stock market remains. Exchange-traded fund (ETF) strategies by investors who have lost direction are splitting sharply between offense and defense. The securities industry warns that premature short-term rebound leverage bets could lead to massive losses.
According to Koscom ETF CHECK on the 10th, individual investors net bought about 57.5 billion won of the KODEX Leverage ETF the previous day, making it the most purchased. That product alone drew a total of 136.3 billion won in a single day, ranking third in inflows. TIGER Semiconductor TOP10 Leverage also ranked third in individual net purchases, underscoring the preference for leverage.
At the same time, buying also concentrated in defensive ETFs. The No. 2 individual net buy was the KODEX 200 Target Weekly Covered Call ETF (38.8 billion won), which defends returns with option premiums, and No. 4 was the KODEX Money Market Active ETF (31.9 billion won), a representative parking-type product.
A covered call ETF buys the underlying asset while selling a call option—the right to buy the stock at a specific price—to earn premium revenue. A money market ETF invests in short-term Government Bonds, commercial paper (CP), and certificates of deposit (CD), accruing interest daily as a "parking-type product," and is treated as a safe asset alongside covered call products.
Although the United States and Iran agreed to a wartime truce, market volatility risk has not been fully removed. Returns likewise reflect the disorderly state of the market.
From the 2nd of last month, when the war broke out, through the previous day, KODEX Leverage and TIGER Semiconductor TOP10 Leverage fell 21.11% and 21.22%, respectively, nearly triple the KOSPI's drop (-7.46%). Leverage ETFs are designed to track twice the underlying index's daily return, so losses can be larger in a downturn.
In particular, the market has swung sharply intraday whenever news related to the Iran war has emerged recently.
On the 8th, when the United States and Iran agreed to a "two-week truce," the KOSPI index surged 6%. But when Iran moved to re-block the Strait of Hormuz the next day, it immediately fell 94.33 points (1.61%), dropping back into the 5,700s.
On the 1st, the KOSPI index also rose 8.44% on hopes of ending the war, the fifth-highest gain on record, but fell 4.47% the next day after Trump said, "We will send Iran back to the Stone Age."
In an environment where market direction changes frequently with each headline, directional bets like leverage ETFs could lead to greater risk, some note. The securities industry is also advising a defensive stance in investment strategy.
Lee Bomi, head of the Capital Market Research Office at the Korea Institute of Finance, said, "With such high volatility, individual investors' strategies are splitting into two camps," and added, "In a market that swings like this, short-term predictions are difficult and losses can grow, so leverage investing should be limited to what you can afford."
Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Given that this agreement is a 'time-limited truce' for two weeks, not an end to the war, the recent rebound is likely a short-term phenomenon."