Korean Stock Crash Spills Over to Hong Kong: SK Hynix Leveraged ETF Plunges 80% Within a Month
Alina Collins
Korea's Kospi plunged over 11% in a single session, triggering a circuit breaker; a Hong Kong-listed 2× leveraged SK Hynix ETF has lost more than 80% from its late-June peak. HSBC warns of a Minsky-moment risk — and deleveraging has barely begun.
How much has this Hong Kong product lost?
The CSOP SK Hynix Daily 2× Leveraged product — an exchange-traded product that doubles the stock's daily move — crashed over 30% on Tuesday and fell as much as 25% intraday on Wednesday.
From its late-June all-time high of HK$193.65, the cumulative July drawdown now exceeds 80%.
This means → HK$1 million invested at the June peak is worth less than HK$200,000 today. In a one-way decline, a leveraged product erodes far faster than its underlying stock.
At end-June the product's market cap briefly topped HK$130 billion, momentarily making it Hong Kong's largest exchange-traded product. That market cap has since collapsed.
What happened to the Korean market itself?
The Korea Composite Stock Price Index (Kospi) fell more than 11% on Tuesday, triggering its 8th circuit breaker this year and dropping below 6,000.
It is now down over 35% from its June peak.
In plain terms = Korea's broad market lost roughly a third of its value in six weeks. The 2× leveraged product listed in Hong Kong amplified that to an 80% wipeout — that is the price of leverage.
Why did the sell-off hit so hard?
Steven Leung, Executive Director of institutional sales at DBS Vickers (under UBS), pointed to two drivers.
Driver one: China's memory-chip maker CXMT (长鑫存储) completed a major funding round, raising the competitive threat — a direct hit to SK Hynix's pricing-power narrative.
Driver two: deepening doubt over whether massive AI capital spending can earn back its cost within a reasonable timeframe.
This means → the sell-off is not just sentiment. It challenges SK Hynix's two core stories at once — its memory-market dominance and the certainty of AI demand.
What does HSBC's "Minsky moment" warning mean?
HSBC flagged Minsky-moment risk in Korean equities. In plain terms = a market loaded with leverage suddenly loses confidence, selling feeds on itself, and a liquidity crisis follows.
Korean retail margin balances fell roughly 15% from their June peak in July, but the absolute level is still about ₩32 trillion.
Only about 2% of outstanding margin accounts were forcibly liquidated in July. This reflects that deleveraging has barely started — most leveraged positions are still open.
Has leverage actually come down?
Total assets in single-stock leveraged ETFs in Korea have dropped to roughly US$10 billion, about one-third of the peak.
HSBC stresses the shrinkage is driven mainly by capital losses, not by investors actively exiting.
This means → investors have not left — their accounts have simply lost money. If losses trigger more stop-losses or margin calls, another wave of forced selling could hit at any time.
Whether leverage continues to unwind passively is the key variable for the next leg in Korean equities and related Hong Kong products.
Content is for reference only, not financial advice.