South Korea to List First 2x Samsung and SK Hynix ETFs as Regulator Warns of Volatility

South Korea introduced single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix on May 27, 2026, seeking to broaden investor choice and draw trading back from overseas markets. Retail demand quickly made the products systemically important: turnover across 16 related funds reached 18.3 trillion won on July 14, about 40% of KOSPI trading. Their daily rebalancing can amplify moves in the country’s two dominant chipmakers, raising concerns over investor protection and broader market stability.

The Financial Services Commission, Financial Supervisory Service and Korea Exchange raised the minimum deposit to 30 million won from 10 million won, with cash required, effective July 31. Trading value in leveraged products linked to Samsung Electronics and SK Hynix subsequently plunged nearly 90%. Investors shifted toward sector ETFs and alternatives listed in markets including Hong Kong. Brokerages warned that such offshore flows could eventually return in concentrated bursts, adding another source of volatility to Korean equities.

Seeking to retain retail funds flowing to overseas markets such as Hong Kong, South Korea’s Financial Supervisory Service eased its ban on single-stock leveraged products on April 28. Financial authorities then allowed eight asset managers on May 27 to launch 16 double-leveraged and inverse products linked to Samsung Electronics and SK hynix. The two chipmakers account for more than half of the KOSPI’s market capitalization, raising concerns that the funds’ daily rebalancing — buying into gains and selling into declines — could amplify volatility across the market.

The products expanded rapidly amid the AI boom, with the combined market capitalization of the 16 funds rising from 4.4 trillion won on May 27 to 11.9 trillion won on July 15. All 14 leveraged products were in negative territory at one point, with the steepest loss reaching 35.9%. After calls for delisting reached parliament, the Financial Services Commission suspended new listings on July 16 and decided to raise the minimum deposit requirement from 10 million won to 30 million won starting August 5.