‘Don’t Assume It Will Rise Now’: ‘Father of Korea ETFs’ Warns on Single-Stock Leverage

Korea Investment Trust Management CEO shares views on social media

‘Single-stock leverage products should be allowed to die out naturally’

‘Memory remains a cyclical industry’

Bae Jae-gyu, chief executive officer of Korea Investment Trust Management, said on July 30 that single-stock leveraged products tied to Samsung Electronics Co. and SK Hynix Inc. should be allowed to “die out naturally” rather than be delisted. Bae is known as the “father of Korea ETFs” after leading the listing of the country’s first exchange-traded fund in 2002 while at Samsung Investment Trust Management, now Samsung Asset Management Co.

Bae posted the remarks on his social media account that day, according to the financial investment industry. “This is not something that should be left to investors alone,” he wrote, adding that it would be possible with support from asset managers, liquidity providers and limited institutional backing.

He said he was well aware of how leveraged and double-inverse products work, and warned that their value can erode quickly when volatility rises and prices swing repeatedly because of daily rebalancing and compounding.

Many investors think, “It has fallen enough, so now it should rise,” or “I can get in briefly and get out quickly,” he wrote. While that approach may produce profits once or twice, it is difficult to build wealth that way.

Bae also said semiconductors are not easily replaceable in the artificial intelligence era, but stressed that memory remains a cyclical industry.

Samsung Electronics, SK Hynix and Micron Technology Inc. have all announced large-scale investments, he wrote. Chinese companies such as ChangXin Memory Technologies and Yangtze Memory Technologies are also rising quickly. Expanding supply is ultimately only a matter of time, he added.

He advised investors to spread their bets across chip design, memory, foundry and equipment, arguing that they can participate in the broader ecosystem’s growth even if one part of the industry weakens.

Lee Su, Hankyung.com reporter 2su@hankyung.com