13 of 14 Samsung, SK Hynix Leveraged ETFs Plunge Below Par Value Overnight, Net Assets Drop 3 Trillion Won in 10 Days

According to Korea Exchange, on July 6, thirteen of fourteen single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix fell below their initial offering price of 20,000 won after the two chip stocks plunged 6.92% and 6.06% respectively. The leveraged funds, designed to track twice the daily movement of their underlying stocks, fell 12-13.7%, with KODEX Samsung Electronics Leveraged ETF dropping 13.71% and TIGER Samsung Electronics Leveraged ETF down 13.88%.

Net assets of the sixteen leveraged and inverse products combined have declined approximately 3 trillion won in ten days, from 17.6 trillion won on June 25 to 14.9 trillion won on July 6, a 15.3% decrease. Single-stock leveraged and inverse ETFs generated 13 trillion won in trading volume on July 6, accounting for one-third of total ETF trading. Deputy Prime Minister Ku Yun-chul stated the government is consulting with related agencies on measures to minimize market volatility caused by leveraged ETFs.