SEOUL, May 28 (AJP) - South Korea's red-hot semiconductor rally spilled into the exchange-traded fund market Wednesday, as the country's first single-stock leveraged ETFs tied to Samsung Electronics and SK hynix drew explosive trading on their debut, giving retail investors a leveraged route into an already crowded chip trade.
Sixteen leveraged and inverse ETFs linked to Samsung Electronics and SK hynix were listed simultaneously, generating a combined trading value of about 10.4 trillion won on their first trading day, according to Yonhap Infomax data. Their combined market capitalization reached nearly 5 trillion won.
The strongest demand centered on products linked to SK hynix, the memory-chip maker that has become one of the biggest beneficiaries of global artificial intelligence investment. Samsung Asset Management's KODEX SK hynix Single Stock Leverage ETF posted the largest trading value among all domestic ETFs at 4.39 trillion won, rising 18.44 percent. Mirae Asset Global Investments' TIGER SK hynix Single Stock Leverage ETF followed with 2.07 trillion won in trading and a gain of 18.56 percent.
Leveraged ETFs tied to Samsung Electronics also attracted heavy demand. Samsung Asset Management's KODEX Samsung Electronics Single Stock Leverage ETF logged 1.95 trillion won in trading, while Mirae Asset's competing TIGER product recorded 1.02 trillion won.
The debut highlights a broader shift in Korea's equity market. Semiconductor heavyweights have already driven the benchmark KOSPI to record highs, leaving many investors wary of entering the trade directly after sharp gains and widening intraday swings. The new ETFs effectively opened another channel for investors seeking amplified exposure to the same stocks, allowing them to ride the chip rally through listed products rather than direct share purchases alone.
The launch came as the KOSPI extended its record-breaking rally. The benchmark closed up 2.25 percent at 8,228.70 on Wednesday after briefly touching an intraday record of 8,450.26. Market participants said demand for the new leveraged products appeared to intensify the already heavy concentration of retail money in leading semiconductor shares.
"Samsung Electronics and SK hynix, the underlying assets for the single-stock leveraged products, have recently shown daily price swings of around plus or minus 5 to 6 percent," Han Ji-young, an analyst at Kiwoom Securities, was quoted as saying. "As they are both market leaders and stocks with concentrated retail flows, the launch could amplify short-term money concentration."
The new products drew immediate demand from retail investors who had watched from the sidelines as chip stocks surged, with some market participants pointing to fear-of-missing-out demand as one factor behind the rush into leveraged ETFs.
The surge also pushed Korea's ETF industry past a major milestone. The combined market capitalization of locally listed ETFs exceeded 500 trillion won for the first time since ETFs were introduced in Korea in 2002, reaching 506.1 trillion won as of late Wednesday morning, according to the Korea Exchange.
But the boom has also raised questions about whether speculative money is building too quickly around a narrow group of semiconductor-linked assets.
On the same day, allegations surfaced that some liquidity providers may have engaged in wash trading to boost trading volume in the newly listed products. Securities firms and the broader financial investment industry denied the claims, while the Korea Exchange said trading volume alone was insufficient to determine whether wash trading had occurred.
An exchange official said the credibility of the allegations was low based solely on execution volume, adding that account-level trading data from liquidity providers is recorded in the exchange database and monitored by its market surveillance division.
SK Securities said wash trading was structurally impossible under its system because such orders are automatically blocked. Yuanta Securities also said it had merely carried out normal liquidity provision duties by narrowing bid-ask spreads and supporting investor protection during the listing process.
The Korea Financial Investment Association said liquidity providers typically hedge opposite positions to manage losses that can arise while supplying liquidity. It also said incentives for liquidity providers were not large enough to create a strong motive for artificial trading.
The intense ETF demand comes as investors are simultaneously parking record amounts of money in money market funds, suggesting that optimism over further stock gains is being matched by caution over extreme volatility.
According to the Korea Financial Investment Association, MMF assets stood at 258.65 trillion won as of May 21, after hitting a record 262.01 trillion won on May 19. Corporate money accounted for more than 90 percent of the total.
MMFs, which invest in short-term instruments such as Treasury bills, commercial paper and certificates of deposit, are widely used as cash parking vehicles because they allow flexible withdrawals and generate interest even over short holding periods. In a highly volatile market, they often function as waiting rooms for capital that has not yet committed to risk assets.
That pattern is now visible in ETF form as well. Over the past month, money market ETFs collectively drew more than 430 billion won in net inflows, led by ACE Money Market Active and KODEX Money Market Active.
The broader appetite for retail investment products was also visible in a separate government-backed fund. The National Growth Fund, which offers tax benefits and carries a government backstop covering up to 20 percent of sub-fund losses, had sold roughly 99.5 percent of its 600 billion won offering by Wednesday afternoon, according to the Financial Services Commission.
Together, the flows show the unusual psychology of Korea's market. Investors are chasing upside through leveraged semiconductor ETFs, parking record amounts of money in cash-like funds and rushing into state-supported investment products at the same time. The pattern suggests that expectations for further gains, including fear-of-missing-out demand, are coexisting with deep caution over extreme volatility.
Volatility remains elevated. The KOSPI recently saw an intraday swing of 675 points on May 15 and surged by 606 points in a single day on May 21. The VKOSPI, Korea's equivalent of the VIX and a widely watched measure of expected market volatility, remained at historically high levels, falling below 70 only after eight consecutive sessions above that threshold. A reading above 50 is generally regarded by market participants as a panic-level signal.
Still, several brokerages have raised their KOSPI targets, with some projecting the index could reach 10,000 or higher this year. Nomura recently lifted its target range to 10,000–11,000, citing improving earnings and return on equity. Hyundai Motor Securities, KB Securities and Hana Securities have also presented bullish scenarios above the 10,000 level.
Wednesday's debut made one thing clear: Korea's chip trade is no longer confined to the stock market. The same rally that has driven the KOSPI to record highs is now reshaping the country's ETF industry, cash management flows and retail investment behavior — drawing in investors who had stayed on the sidelines, even as large pools of short-term money remain on standby amid extreme volatility.
Copyright ⓒ Aju Press All rights reserved.
