Bond.az reports that South Korea will launch its first single-stock leveraged exchange-traded funds this week. These funds target twice the daily performance of shares in Samsung Electronics and SK Hynix.
The new ETFs provide leveraged exposure to two of the country's largest companies, both major beneficiaries of rising demand for AI-related chips.
The launch comes as South Korean regulators seek to attract retail trading back to domestic markets amid investors' increasing turn to overseas-listed leveraged products tied to local stocks.
South Korea has over 14 million retail investors. Analysts expect strong demand for the new funds due to continued enthusiasm for AI investments.
Leveraged ETFs use derivatives to amplify daily returns of an underlying asset. They can magnify gains but also increase losses and market volatility.
Bloomberg reported that a Hong Kong-listed leveraged ETF tied to Samsung Electronics has attracted about $1.3 billion in net inflows this year. A similar fund linked to SK Hynix has drawn roughly the same amount, becoming the world's largest single-stock leveraged ETF.
Market participants have linked rebalancing from leveraged products to heightened volatility in Korean semiconductor shares. Barclays estimates that rebalancing accounted for about 17% of SK Hynix's daily volume and 10% of Samsung's during a sharp selloff on May 15.
South Korea's Financial Supervisory Service has warned about risks of leveraged products. Analysts estimate net inflows into 14 leveraged ETFs tied to Samsung and SK Hynix could reach 5.3 trillion won ($3.5 billion).
About 300,000 investors completed mandatory training for leveraged ETF investing in the first two months of this year, exceeding the total in 2025.
