Trading in Korea's stock market is becoming increasingly concentrated in Samsung Electronics and SK hynix. The two stocks alone accounted for more than half of all transactions in the domestic market by value, and when including single-stock leverage and inverse exchange-traded funds (ETFs), the share of trading value was found to be close to half of the total.
In the securities industry, there are growing concerns that the semiconductor-centered concentration of supply and demand, coupled with single-stock leveraged products, is further amplifying market volatility.
According to the Korea Exchange (KRX) on the 9th, on the 8th the trading value of Samsung Electronics and SK hynix was 9.5563 trillion won and 15.2560 trillion won, respectively. The two stocks totaled 24.8123 trillion won, accounting for 51.0% of the total trading value on KOSPI and KOSDAQ (48.6090 trillion won).
This is a sharp increase of 21 percentage points from May 26, right before the listing of single-stock leverage and inverse ETFs (30.0%).
Adding the 16 single-stock leverage and inverse ETFs with Samsung Electronics and SK hynix as underlying assets (15.6045 trillion won) brings the trading scale close to 40 trillion won. Trading in Samsung Electronics, SK hynix, and leverage ETFs that track only those stocks accounts for 44.1% of the domestic market's trading value (KOSPI, securities on the main board, and KOSDAQ + ETPs, 91.6314 trillion won). Considering that most ETFs also include the two stocks, their trading share is estimated to exceed half.
As funds pile into the two stocks, market volatility is increasing. When the two fell about 6% side by side on the 7th and 8th, the KOSPI also dropped 4.91% and 5.35%, respectively.
The semiconductor concentration is becoming even clearer in securities lending balances, which are regarded as a leading indicator of short selling.
On May 26, Samsung Electronics and SK hynix accounted for 32.1% of total securities lending balances, but by the 8th that share had expanded to 38.9%. In particular, SK hynix's lending balance increased by more than 5 trillion won, and its share of total securities lending rose from 16.2% to 21.5%.
The securities industry analyzes that single-stock leveraged ETFs have structural characteristics that amplify market volatility.
Yoo Myung-gan, a researcher at Mirae Asset Securities, said, "The recent sharp market correction is driven more by technical factors stemming from the short gamma structure of leveraged ETFs than by fundamentals," adding, "Because leveraged ETFs buy when prices rise and sell when prices fall, this is a phase that requires continuous monitoring."
Kim Seok-hwan, a researcher at Mirae Asset Securities, also said, "Leveraged ETFs rebalance right before the market close every day to match the underlying index's daily return," and explained, "This process creates an artificial short gamma exposure, reinforcing forced trading flows in response to price swings."
There is also analysis that market volatility has expanded significantly since the listing of single-stock leveraged ETFs.
Lee Jae-won, a researcher at Yuanta Securities Korea, said, "In less than a month and a half since the launch of single-stock leveraged ETFs, sidecars were triggered 16 times out of 49 and circuit breakers 5 times out of 8," adding, "The higher the volatility, the harder it becomes for institutional investors to put in new funds due to risk limits and liquidity constraints."
He added, "In a market where sidecars and circuit breakers are repeatedly triggered as they are now, it is difficult to expect large-scale institutional inflows solely from fundamental improvements," and noted, "Institutional safeguards to reduce market volatility are also needed."