Samsung Electronics, SK Hynix and Related Leveraged Trades Make Up 83% of Korea Market Turnover

Kospi Whipsaws With Samsung Electronics and SK Hynix Moves

Trading in South Korea’s stock market is increasingly concentrated in Samsung Electronics and SK Hynix. Including single-stock leveraged and inverse products, the two names accounted for more than 80% of trading value.

Korea Exchange data showed Samsung Electronics posted 9.5563 trillion won in trading value on July 8, while SK Hynix reached 15.256 trillion won. Together, the two stocks accounted for 51% of the 48.609 trillion won traded across the domestic stock market, including the Kospi and Kosdaq. That was up 21 percentage points from 30% on May 26, the day before single-stock leveraged and inverse products were listed.

As of July 8, adding 15.6045 trillion won in trading value from 16 single-stock leveraged and inverse products lifts the share tied to Samsung Electronics, SK Hynix and related products to 83.1%. A direct comparison has limits because Kospi and Kosdaq trading figures do not include ETF turnover. Still, the market impact of the two large semiconductor stocks has clearly grown since single-stock leveraged products were introduced.

The Kospi has also been heavily driven by moves in the two shares. On July 7 and July 8, when Samsung Electronics and SK Hynix both fell, the Kospi dropped by a similar magnitude. On July 7, Samsung Electronics slid 6.92% and SK Hynix lost 6.06%, while the Kospi fell 4.91% to close at 7,656.31. On July 8, Samsung Electronics dropped 6.25% and SK Hynix fell 5.68%, sending the Kospi down 5.35% to 7,246.79.

The two stocks also took a bigger share of outstanding stock borrowing, a leading indicator for short selling. On May 26, outstanding stock borrowing in Samsung Electronics and SK Hynix stood at 23.6666 trillion won and 23.9763 trillion won, accounting for 15.9% and 16.2% of the total, respectively. By July 8, those figures were 23.524 trillion won for Samsung Electronics and 29.0041 trillion won for SK Hynix, lifting their shares to 17.4% and 21.5%. Their combined share rose to 38.9% from 32.1%.

Concerns are growing among brokerages and policymakers over concentration in large semiconductor stocks and volatility amplified by single-stock leveraged products. The Bank of Korea recently said that with Samsung Electronics and SK Hynix accounting for more than half of the stock market’s market capitalization and trading, broader investment in single-stock leveraged products could intensify that concentration. The Financial Supervisory Service said it will continue monitoring the market impact and, if necessary, review whether asset managers engaged in excessive marketing.

Oh Se-song, Hankyung.com reporter sesung@hankyung.com