Single-Stock Leveraged ETF Turnover in Korea Drops to 1.25 Trillion Won From 12.45 Trillion Won After Deposit Rule

Trading slows after minimum cash deposit is raised to 30 million won

Aug. 3 turnover totals 1.2479 trillion won

Lowest level since listing

Trading in single-stock leveraged and inverse exchange-traded funds shrank to its lowest level since listing after the minimum deposit requirement for the products was raised.

The Korea Exchange said Aug. 3 turnover in 16 single-stock leveraged and inverse 2x ETFs tied to Samsung Electronics and SK Hynix totaled 1.2479 trillion won.

It was the first time daily turnover in the products had fallen to the 1 trillion won range since the ETFs were listed in May.

Before the rule took effect, turnover stood at 12.4485 trillion won on July 30. It then dropped to 3.1518 trillion won on July 31, the first day the minimum cash deposit was raised to 30 million won. On Aug. 3, the second trading day under the rule, turnover fell again to 39.6% of the previous session.

The drop in trading appears to reflect the new rule requiring investors opening new positions to secure 30 million won in cash, excluding eligible securities.

The reduced trading has also raised expectations that concerns over volatility in stock-market supply and demand may ease.

Samsung Electronics and SK Hynix, the underlying assets for the ETFs, fell 8.76% and 8.79%, respectively, on the day. Leveraged products linked to the stocks dropped by as much as 18%.

Retail investors were net sellers of 79.3 billion won across the 16 products.

By product, the heaviest selling was in the SOL SK Hynix Futures Single Stock Inverse 2X ETF at 30.3 billion won, followed by the KODEX SK Hynix Single Stock Leverage ETF at 23.6 billion won and the KODEX Samsung Electronics Single Stock Leverage ETF at 13.6 billion won.

Park Sang-kyung, Hankyung.com reporter, highseoul@hankyung.com