Samsung, SK Hynix Leveraged ETFs Leave Retail Investors Reeling

Leveraged ETFs Plunge After AI Stock Reversal

South Korean retail investors are facing heavy losses after a sharp reversal in technology stocks exposed the risks associated with Samsung and SK Hynix leveraged ETFs. The products became more popular during the country’s artificial intelligence and semiconductor rally, which allowed traders to amplify the daily movements of South Korea’s two largest chipmakers.

Retail demand for these products surged after single-stock leveraged exchange-traded funds were introduced on May 27. Korean individual investors have since purchased a net 14 trillion won, which is equivalent to approximately $9.4 billion, according to KB Financial Group.

The strategy initially looked attractive as Samsung Electronics and SK Hynix benefited from strong investor enthusiasm around artificial intelligence, memory chips and data-centre demand. However, the quick decline in semiconductor shares has caused a lot of damage to investors holding Samsung SK Hynix leveraged ETFs.

The KODEX SK Hynix Single Stock Leverage ETF, which is designed to generate twice the daily percentage movement of SK Hynix shares, has fallen by almost 70% from the record high it reached in June. The fund is also down roughly 50% from its launch price. Because leveraged ETFs reset their exposure every day, prolonged volatility and repeated declines can result in losses that are bigger than investors may initially expect.

KODEX SK Hynix Single Stock Leverage ETF (Source: Yahoo Finance)

The steep drop caused some frustration in South Korean online trading forums, particularly after SK Hynix suffered its largest one-day decline on record. Investors posted emotional messages describing severe financial losses and regretting their decision to enter the stock market.

Domestic retail traders have carried most of the losses. Jung In Yun, founder of Fibonacci Asset Management, said the affected investors are overwhelmingly South Korean individuals. He added that many buyers are not inexperienced young traders, but investors in their 40s and 50s who have become comfortable using leverage and making concentrated bets on technology stocks.

Leveraged products have also become a much larger part of the South Korean market. Assets held by the 25 largest leveraged Korea-focused ETFs accounted for approximately 30% of the category by June, up from about 15% at the beginning of 2026. This is according to Oxford Economics.

The Bank of Korea warned that leveraged stock investment among retail traders has reached a record high. Much of the increase has been driven by margin borrowing and concentrated positions in semiconductor companies. Although the central bank does not currently view the situation as a systemic risk, it said leverage could intensify market volatility during corrections.

South Korean regulators have now introduced stricter requirements for Samsung SK Hynix leveraged ETFs and similar single-stock products. Investors will be required to maintain at least 30 million won in cash to trade them, compared with an effective previous minimum of approximately 3 million won.