Retail Investors Reel After Samsung, SK Hynix Slump Batters Leveraged ETFs

Investors Rush Into Leveraged Products

Double-Digit Losses in a Day

Retail investors who bet on gains in Samsung Electronics Co. and SK Hynix Inc. suffered heavy losses after the two chip stocks tumbled. Investors who belatedly piled into leveraged products on expectations of an artificial intelligence-driven semiconductor boom were saddled with double-digit losses in a single session.

According to the Korea Exchange, Samsung Electronics and SK Hynix closed 6.40% and 9.92% lower, respectively, than the previous trading day on June 5. The sharp drop in both stocks dealt a direct blow to single-stock leveraged exchange-traded funds that track twice the return of the underlying shares.

Leveraged products tied to SK Hynix fell about 20% in one day. ACE SK Hynix Single Stock Leverage dropped 19.68%, KODEX SK Hynix Single Stock Leverage lost 20.29%, RISE SK Hynix Single Stock Leverage fell 20.12%, SOL SK Hynix Single Stock Leverage slid 19.77%, and TIGER SK Hynix Single Stock Leverage declined 20.11%. KIWOOM SK Hynix Futures Leverage sank 20.90%, while 1Q SK Hynix Single Stock Leverage fell 20.01%.

Samsung Electronics-linked leveraged products also posted steep losses. ACE Samsung Electronics Single Stock Leverage dropped 14.08%, KODEX Samsung Electronics Single Stock Leverage fell 13.24%, and PLUS Samsung Electronics Single Stock Leverage lost 13.34%. RISE Samsung Electronics Single Stock Leverage declined 13.77%, TIGER Samsung Electronics Single Stock Leverage dropped 13.48%, KIWOOM Samsung Electronics Futures Single Stock Leverage lost 14.53%, and 1Q Samsung Electronics Futures Single Stock Leverage fell 13.35%.

The market's selloff was widely attributed to a "Broadcom shock" that chilled sentiment toward semiconductor shares. Broadcom reported earnings below market expectations, and its revenue guidance also missed forecasts, reviving concerns that the chip cycle may be nearing a peak.

Samsung Electronics and SK Hynix had surged over a short period on expectations for rising AI investment and stronger demand for high-bandwidth memory, or HBM. That also appears to have fueled profit-taking pressure. Because leveraged ETFs can post losses roughly double the decline in the underlying asset, downturns can be amplified in volatile trading.

Brokerages in South Korea largely interpret the latest pullback as a period of heightened volatility after a sharp rally. Their view is that the earnings recovery at semiconductor companies and the broader AI investment cycle have not been derailed.

Still, market experts advise caution on single-stock leveraged products. Returns are highly dependent on the short-term direction of an individual stock, and losses can mount quickly in a sharp selloff. Separate from the medium- to long-term outlook for the semiconductor industry, volatility management is becoming the key factor that determines returns in leveraged investing.

Lee Song-ryeol, Hankyung.com reporter yisr0203@hankyung.com