As the KOSPI continues its rollercoaster performance, the exchange-traded fund (ETF) market has emerged as a battleground for 'dual betting.' With a surge in trading of inverse products betting on declines and leverage products aiming for rebounds, single-stock ETFs for Samsung Electronics and SK Hynix have dominated trading volumes, raising concerns about increased market volatility due to short-term trading.
According to the Korea Exchange, from June 1 to July 10, all of the top 10 ETFs by trading volume were leverage and inverse products. Among these, five were single-stock leverage and inverse ETFs based on Samsung Electronics and SK Hynix.
The top traded product was 'KODEX 200 Futures Inverse 2X,' with a trading volume of 314.6 billion shares during this period. It was followed by 'KODEX Inverse' (30.4 billion shares) and 'SOL SK Hynix Futures Single Stock Inverse 2X' (5 billion shares). The top 10 also included leverage ETFs for KOSDAQ 150 and secondary batteries, alongside the single-stock ETFs for Samsung and SK Hynix.
Since the listing of single-stock leverage and inverse ETFs for Samsung Electronics and SK Hynix at the end of May, these products have quickly entered the top trading ranks. Analysts attribute this to increased demand for betting on declines and short-term rebounds following the KOSPI's significant fluctuations, including a breach of the 9,000 mark last month.
The leverage ETF market is also expanding rapidly. According to Mirae Asset Securities, the net assets of domestic leverage ETFs increased from 9 trillion won last year to 41 trillion won last month, with an average daily trading volume of 13 trillion won recorded since mid-June.
Individual investors have focused their funds on semiconductor leverage ETFs. From July 1 to 10, individuals net purchased 1.66 trillion won in seven types of SK Hynix single-stock leverage ETFs and 599.1 billion won in seven types of Samsung Electronics single-stock leverage ETFs. The total net inflow into the 14 related leverage ETFs reached 2.26 trillion won.
Lee Sang-hyun, a researcher at Meritz Securities, stated, "The daily rebalancing of leverage and inverse ETFs exhibits trading characteristics similar to 'short gamma,' where exposure increases when stock prices rise and decreases when they fall. This raises concerns about amplifying market volatility and price fluctuations."
However, the actual rebalancing scale is limited, accounting for 4.1% for Samsung Electronics and 5.5% for SK Hynix relative to trading volumes, suggesting a restricted impact on the overall market. The researcher added, "If rebalancing is concentrated before market close, there is a possibility of abnormal trading due to mechanical trading."
* This article has been translated by AI.
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