Trading activity in single-stock leverage exchange-traded funds (ETFs) has noticeably weakened ahead of the early implementation of investor protection measures. Trading value fell below 10 trillion won, and buying pressure from retail investors also softened considerably.
According to the Korea Exchange on the 27th, the combined trading value of 16 single-stock leverage and inverse products tied to Samsung Electronics (005930.KS) and SK hynix (000660.KS) reached 7.4464 trillion won that day. This represents a decline of more than 30% from last week's daily average trading value of 11 trillion won, and about a 28% drop compared with the previous trading day's 10.2 trillion won. Their share of total domestic ETF trading value also fell to 37.2%, from 40% on the 23rd of this month.
SK hynix-related products still accounted for the top spots in trading value. SOL SK hynix Futures Single-Stock Inverse 2X and KODEX SK hynix Single-Stock Leverage ranked first and second in ETF trading value at 2.61 trillion won and 2.6 trillion won, respectively. However, compared with the previous trading day, they were down by about 1 trillion won and 500 billion won, respectively. TIGER SK hynix Single-Stock Leverage recorded trading value of 930.7 billion won, while KODEX Samsung Electronics Single-Stock Leverage and TIGER Samsung Electronics Single-Stock Leverage came in at 664.5 billion won and 420.5 billion won, respectively.
The trading patterns of retail investors also changed. Among the top 10 stocks in retail net buying that day, only SOL SK hynix Futures Single-Stock Inverse 2X made the list, with net buying of 40.4 billion won. Other single-stock leverage products disappeared from the upper ranks. On the Kospi market that day, Samsung Electronics closed up 1.80% and SK hynix rose 3.24%, and the related leverage products also posted gains of around 6% and 3%, respectively, but buying pressure weakened instead.
Financial authorities have decided to move up the implementation of complementary measures for single-stock leverage products, including a higher basic deposit requirement, to the 31st of this month from the originally planned August. Under the measures, the basic deposit will be raised to 30 million won from the previous 10 million won, and substitute securities such as stocks, ETFs and bonds will be excluded from the deposit calculation.
Once the new system takes effect, investors must maintain 30 million won in cash to newly purchase or add to single-stock leverage ETFs. In particular, even if an investor buys stocks or ETFs with cash on the same day (T-day) and then sells them, they will be unable to buy single-stock leverage ETFs until the settlement date (T+2) unless they make an additional separate cash deposit.
