News from the IT home on October 7th: According to Bloomberg, data disclosed by the office of a South Korean lawmaker shows that in just a few months, South Korean retail investors incurred an estimated total loss of 2.3 trillion Korean won (approximately 11.403 billion yuan) on leveraged exchange-traded products tracking the country's two major chip giants. This data reveals for the first time the scale of the risks associated with such speculative trading.
The office of Choi Eun-soo ( Choi Eun - seok ), a member of the opposition National Power Party in South Korea, stated that between May 27 and August 14, customers of 10 securities firms in South Korea who invested in stocks ETF linked to Samsung Electronics and SK Hynix, as well as in income certificate products, suffered the aforementioned losses.
Choi Eun-soo's office stated that this set of data comes from the Financial Services Commission of South Korea. The regulatory agency has compiled business information submitted by various securities firms, including Future Asset Securities, Kiwoom, Samsung Securities, and NH Investment Securities.
Since its official launch in May, these leveraged products for individual stocks have further exacerbated the volatility in South Korea's stock market, which is primarily dominated by the AI sector. In the early stages, a large amount of leveraged funds flowed into the market, pushing South Korea's stock market to rank among the best-performing in the world; however, after the subsequent market reversal, investors suffered significant losses.
The severe fluctuations caused by these high-risk products prompted regulatory authorities to take action, cooling down the enthusiasm for retail investing; as a result, the trading volume of related products also plummeted significantly.
Starting from July, South Korean regulatory authorities introduced a number of control measures, including suspending the approval for the listing of new leveraged stock products, raising the minimum margin requirements for investors, and adding requirements for investor training.
This marks a clear shift in regulatory attitude. These products were originally approved and launched by the regulators in May, with the intention of preventing domestic investors from flocking to overseas markets to trade similar ETF.
Although the initial intention of designing leveraged products is to amplify profits, once the market trend reverses, it can also cause significant losses for investors. Moreover, the South Korean stock market is highly tied to the AI industry cycle, and Samsung and SK Hynix hold a core position in the entire supply chain, which further magnifies the fluctuations in market conditions.
