Trading Volume of Korean Chip Leveraged ETFs Falls to 4% of Peak; Mandatory Simulated Trading Drives Retail Investors Out

Trading volume for double-leveraged single-stock ETFs tracking Samsung Electronics and SK Hynix has fallen to 4% of its June peak, with the products potentially recording their first monthly net outflows since launch in August. South Korea has tightened trading rules consecutively since July, with the mandatory simulated trading requirement effective August 19 seen as a key factor behind declining retail participation. Under the new rules, investors must complete a 5-day simulated trading course, download a Windows-only program, trade for at least 1 hour daily with virtual funds, with the system providing 100 million won in virtual capital and requiring a minimum cash deposit of 30 million won. The Korea Exchange has stated there are no plans for a mobile-based simulated trading platform.

These single-stock leveraged ETFs were launched in May this year and, at their peak, combined with the two companies' stocks to account for over 80% of total trading volume on the South Korean stock market. Data shows combined net outflows of approximately $1 billion in August, with assets under management falling from a peak of $11.4 billion in late June to $5 billion as of August 27. Concerns over AI capital expenditure and commercialization prospects have also triggered multiple rounds of global tech stock selloffs. Bloomberg Intelligence analyst Rebecca Sin stated that with continued regulatory tightening, related outflows may persist in the short term; market volatility has declined from 97 in late June to around 50. South Korea's benchmark stock index has risen 61% this year but remains 25% below its record high set two months ago.

[BlockBeats]