South Korea's leveraged exchange-traded fund trading volume has fallen sharply after regulators raised the minimum cash requirement to trade these products tenfold, to 30 million won from an effective floor of 3 million won.
The move followed the May 27 launch of single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix, the country's two largest chipmakers. Retail investors moved quickly into the products, accumulating net purchases of 14 trillion won ($9.7 billion), according to KB Financial Group data. Foreign investors bought approximately 2 trillion won of the same products over the same period.
The retail surge coincided with a sharp drop in the benchmark Kospi index, which fell to the 5,600 range, erasing billions of dollars in investor holdings. The government introduced the new investment threshold on Wednesday in response to the selloff and pledged additional steps to stabilize the market. A government minister apologized to investors who sustained heavy losses.
Peter Kim, head of global investment strategy at KB Financial Group, commented on the market situation.
The 14 trillion won in retail net purchases underscores how quickly demand built for leveraged single-stock exposure—and how directly the new rules curtail it.
