Retail Investors Plow 18.9 Trillion Won Into Leveraged Bets on Kospi Rebound

As South Korea’s stock market extends its recovery, investors are showing a renewed appetite for risk. This month, exchange-traded funds that bet on gains in local benchmarks have ranked among the market’s most actively traded products. Trading in inverse ETFs has also stayed brisk, underscoring continued demand for protection against further volatility.

Korea Exchange data show the most heavily traded ETF from Aug. 3 to Aug. 14 was KODEX Leverage, with turnover of 18.8987 trillion won ($13.6 billion). The fund tracks twice the daily return of the Kospi 200 Index. KODEX 200 ranked second with 17.6623 trillion won ($12.7 billion) traded.

As worries about a slowdown in artificial intelligence infrastructure investment have eased and foreign investors have continued buying, the Kospi has moved back above 7,000, reviving interest in an index rebound. Data from Koscom ETF Check showed inflows over the past week were concentrated in products positioned for gains. KODEX 200 drew 440.1 billion won ($317 million), the largest inflow among all ETFs, while KODEX Kosdaq150 attracted 105.8 billion won ($76.2 million).

Daishin Securities said the Kospi’s forward price-to-earnings ratio stood at 5.74, still below 6 and near a historic low. Lee Kyung-min, an analyst at Daishin Securities, said valuations could normalize quickly because fundamentals and stock prices have been moving in opposite directions. Even without a distinct catalyst, easing uncertainty and improved market flows could fuel a strong rebound. A recovery in the forward P/E to 7 could allow the Kospi to test 8,500, Lee said.

Bets on a Kosdaq rebound were also prominent. KODEX Kosdaq150 Leverage, which tracks twice the daily return of the Kosdaq150 Index, recorded 8.6962 trillion won ($6.26 billion) in turnover this month, ranking fourth among all ETFs. KODEX Kosdaq150 ranked eighth with 5.6452 trillion won ($4.06 billion) traded over the same period. The activity reflects expectations that government measures to revitalize the Kosdaq market could help drive a rebound.

Investors were also hedging for renewed weakness. KODEX Inverse, which bets on declines in the Kospi 200, ranked third with 11.3813 trillion won ($8.19 billion) in turnover. KODEX 200 Futures Inverse 2X, which seeks returns equivalent to twice the index’s daily decline, ranked fifth with 7.54 trillion won ($5.43 billion) traded. The figures suggest hedging demand against another drop and short-term directional trading are taking place alongside the rebound.

Funds also flowed into US benchmark equity ETFs and short-term cash products. TIGER US S&P500 ranked sixth with 7.0789 trillion won ($5.10 billion) in turnover, while KODEX CD Rate Active (Synthetic), which tracks certificate of deposit rates, ranked 10th with 4.5323 trillion won ($3.26 billion). The pattern indicates investors are betting on a rebound in domestic equities while continuing to diversify into US stocks or park cash in short-term instruments.

Jo Ara, Hankyung.com reporter rrang123@hankyung.com