South Korean investors pulled nearly $1 billion from leveraged ETFs linked to the country’s biggest chipmakers this month, capping one of the most dramatic boom-and-bust cycles in recent ETF history.
The funds, which offered 2x leveraged exposure to Samsung Electronics and SK Hynix, launched at the end of May 2026 to feverish demand. Within roughly two months, retail investors had poured approximately 14 trillion won, around $9.7 billion, into the products. Combined assets under management ballooned to approximately $28 billion.
From record inflows to 80% drawdowns
The KODEX SK Hynix Single Stock Leverage ETF cratered more than 80% from its peak on June 23. Its Samsung equivalent dropped about 75% from a June 3 high.
South Korea’s finance minister publicly apologized in late July for insufficient safeguards around the products. Regulators tripled the minimum cash requirement for investors to 30 million won, halted new product listings, and restricted retail access to the funds.
Daily trading turnover for these leveraged ETFs plunged more than 90%. On July 30, combined turnover sat at 12.45 trillion won. Shortly after the new rules took effect, that figure dropped below 1 trillion won. KODEX SK Hynix’s individual turnover fell from 1.3 trillion won to 560 billion won by August 3.
Regulatory aftermath and market implications
The collapse in trading activity has contributed to a broader contraction in South Korea’s ETF market. When daily turnover drops by 90% in a product category that had been generating some of the country’s highest volumes, that vacuum gets felt across the entire ecosystem: from market makers to brokerages to exchanges.
The fact that the finance minister felt compelled to apologize suggests the existing approval process failed to account for the risk that retail investors would pile in at exactly the wrong moment. Cumulative losses across the leveraged ETF space reached into the trillions of won.