KOSPI Tops 8,000 for First Time, but Investors Pile Into 2x Inverse ETFs

Korea Economic Daily

Summary

In the second week of May, KODEX 200 Futures Inverse 2X drew 327.6 billion won in net inflows, indicating increased bets on a decline in the KOSPI 200 index.
Despite the KOSPI's sharp rally and its first intraday break above the 8,000 level, investors bought more inverse ETFs, reflecting expectations of a possible correction.
Another 2x inverse ETF, TIGER 200 Futures Inverse 2X, drew net inflows of 51.1 billion won and 109.5 billion won in the first and second weeks of May, respectively, but returns were weak, including a 4.07%% loss.

Forecast Trend Report by Period

The KOSPI climbed above 8,000 for the first time ever in May, but investors increased purchases of exchange-traded funds that bet on a market decline.

According to Koscom CHECK on May 17, KODEX 200 Futures Inverse 2X recorded net inflows of 327.6 billion won in the second week of May, from May 11 to May 15, ranking fifth among 801 ETF products. The fund is designed to deliver twice the inverse return of the KOSPI 200 index.

Funds flowed into inverse ETFs even after the KOSPI jumped as high as 8,046.78 intraday on May 15, breaking above the 8,000 mark for the first time. The move suggests investors were betting that a correction could follow the market's sharp rally.

The same pattern appeared in the first week of May, from May 4 to May 8, when the KOSPI rose 13.63% to 7,498.00 from 6,598.87. KODEX 200 Futures Inverse 2X posted net inflows of 125.5 billion won during that week. Another 2x inverse product, TIGER 200 Futures Inverse 2X, drew 51.1 billion won in the first week of May and 109.5 billion won in the second week.

The KOSPI's closing level is displayed on an electronic board at the Korea Exchange in Seoul's Yeouido district on the afternoon of May 15, after the index rose above 8,000 points for the first time intraday before ending the session in the 7,490 range. Photo: Hankyung DB

Returns, however, were weak. KODEX 200 Futures Inverse 2X lost 4.07% from May 11 to May 15, ranking 661st among 795 ETFs. That figure includes a 13.46% gain on May 15, when the KOSPI plunged. Excluding May 15, the fund lost 15.45% from May 11 to May 14.

Lee Jung-woo, Hankyung.com reporter, krse9059@hankyung.com