South Korea's KOSPI rebounded for the first time in five sessions despite 1.6 trillion won ($1.2 billion) in foreign selling, yet retail investors piled into inverse exchange-traded funds that bet on index declines. They simultaneously dumped leveraged products, signaling profit-taking on the bounce. Although the KOSPI reclaimed the 6,700 level and optimism over artificial intelligence infrastructure demand persists, analysts say individual investors are looking further down.
The ETF that retail investors bought most on the previous day was KODEX Inverse, which tracks the inverse of the KOSPI 200's daily return, according to Koscom and Timefolio Asset Management on the 17th. Net purchases totaled 38.7 billion won. Inverse products swept the top three spots, followed by KODEX 200 Futures Inverse 2X, a double-inverse product that delivers twice the index's decline, at 27.8 billion won, and SOL SK hynix Futures Single-Stock Inverse 2X, which tracks twice the inverse of SK hynix's return, at 20.6 billion won. Amid a surge in international oil prices that had been cited as an external risk, KODEX WTI Crude Oil Futures Inverse (H), which bets on falling crude prices, ranked eighth with 6.1 billion won in net purchases.
Leveraged products that had wagered on gains in the index and market leaders topped the net selling list. KODEX Leverage, which tracks twice the index's advance, saw 101.1 billion won in outflows to rank first in net selling. KODEX 200 followed at 36.6 billion won and KODEX SK hynix Single-Stock Leverage at 22.3 billion won, taking second and third. KODEX Semiconductor Leverage, at 11.7 billion won, and KODEX KOSDAQ 150, at 11.3 billion won, ranked fifth and sixth. TIGER SK hynix Single-Stock Leverage, at 8.1 billion won, and TIGER Semiconductor Top 10 Leverage, at 5.9 billion won, ranked eighth and tenth.
The KOSPI rose 1.37% the previous day on institutional buying despite the 1.6 trillion won in foreign selling, but retail investors read the move as a technical rebound. Analysts say the ETF trading pattern showed individuals betting on declines amid uncertainty over the U.S. Federal Reserve's rate decision that day. One official in the financial investment industry said retail investors focused on risk-averse trading, unwinding leveraged positions to lock in gains while buying inverse products to hedge against volatility as the index rebounded sharply ahead of a monetary policy decision.
