Samsung and SK Hynix Leveraged ETFs Nearly All Trading Below IPO Price as Korean Politicians Call for Forced Delisting
Alina Collins
Thirteen of Korea's 14 single-stock 2× leveraged ETFs have fallen below their ₩20,000 issue price, shedding roughly ₩3 trillion in barely two months; an opposition lawmaker is calling for forced delisting, saying KOSPI has become a casino.
Down 12%–13% in a single day — what happened?
On July 7 Samsung Electronics closed down 6.92% and SK Hynix fell 6.06%. All 14 single-stock 2× leveraged ETFs tracking the two names plunged 12%–13%; some briefly dropped around 20% intraday.
This means → the underlying stocks lost roughly 6%–7%, and the leveraged products doubled the damage — that is exactly how "2× leverage" works: gains are amplified on the way up, losses on the way down.
Only KODEX SK Hynix Single-Stock Leveraged ETF still trades above the ₩20,000 issue price. The other 13 have all broken it.
A third of all ETF turnover — how can these products move the entire market?
The 16 single-stock leveraged and inverse ETFs traded a combined ₩13.1 trillion on the day, more than a third of the market's total ETF turnover of ₩36.5 trillion.
Samsung and Hynix together account for over half of KOSPI's market cap. Every evening these leveraged ETFs must "rebalance" — adjusting positions back to exactly 2× exposure — and the concentrated sell orders add direct pressure to the underlying shares.
In plain terms = the ETFs do not just follow the stock price; their hedging trades push it further. On this day the selling triggered both a sidecar halt and a full circuit breaker.
How much have investors lost — and what is "negative compounding"?
As of July 6 the 16 leveraged ETFs held total net assets of ₩14.9 trillion, down 15.3% from ₩17.6 trillion on June 25 — a loss of roughly ₩3 trillion.
Mirae Asset Securities analyst Kim Seok-hwan estimates Samsung-linked products lost about ₩400 billion in value and Hynix-linked products about ₩600 billion. Net inflows continue, yet valuation losses keep widening.
In plain terms = leveraged products suffer a trap called "negative compounding": when the underlying stock swings up and down repeatedly, even if it ends up back where it started, holders' principal is ground down round after round. Investor forums are already reporting that "the investment is evaporating."
The inverse ETFs that bet on a decline — how much did they gain?
Mirroring the leveraged losses, inverse 2× products surged: SOL SK Hynix Futures Single-Stock Inverse 2X rose 11.84%; PLUS Samsung Electronics Futures Single-Stock Inverse 2X gained 12.68%.
This reflects a market that is not in one-directional panic — a pool of capital is actively shorting, and the inverse products' own rebalancing adds yet more downward pressure on the underlying shares.
Politicians are demanding delisting — can it actually happen?
Opposition lawmaker Ahn Cheol-soo cited ₩212 trillion in cumulative turnover as proof these products are driving wild swings. He noted all 14 leveraged ETFs posted negative returns over the past month — the worst down 35.9% — and called for forced delisting plus the dismissal of the heads of the Financial Services Commission and the Financial Supervisory Service.
Ruling-party policy chief Han Jeoung-ae said her party would assess whether additional regulation is needed. Deputy Prime Minister Koo Yoon-chul told parliament the government is discussing how to minimize volatility.
This means → political pressure is intense, but the market broadly sees forced delisting as very unlikely. Under Korea Exchange rules an ETF can be delisted only in specific cases such as the underlying stock being delisted or serious disclosure violations by the issuer — neither condition is met today.
What will regulators do next?
These products listed on May 27, rode the AI investment wave to attract massive inflows, and within two months have exposed multiple side effects.
Financial Supervisory Service Governor Lee Chan-jin has publicly expressed regret, saying "we pushed it through too hastily." The Bank of Korea has warned that single-stock leveraged ETFs can funnel capital excessively into a handful of stocks and amplify volatility through daily rebalancing.
The FSS is evaluating alternatives such as tightening trading requirements, but has reached no conclusion. This reflects a regulator still searching for the balance between "protecting investors" and "not breaking market rules" — the next move will be the pivotal call on these products' fate.
Content is for reference only, not financial advice.