Archive · 12 Oct 2026
South Korea’s Leveraged Chip ETFs Reveal Risks for Investors
Some funds try to make two or three times a stock’s daily gains or losses.
They reset their bets each day, so holding them for a long time can produce a very different result from simply multiplying the stock’s overall change.
In South Korea, many retail investors bought leveraged products tied to Samsung Electronics and SK Hynix.
When those stocks fell in July, the products lost value very quickly.
A lawmaker’s office said investors lost about $1.7 billion over a period from late May to mid-August.
Korean regulators later raised the minimum cash deposit and required education and practice trading.
Indian investors can face similar risks when trading futures and options, or by buying leveraged funds listed in the United States.
SEBI reported that more than 91% of individual derivatives traders lost money in FY25.
Retail investors lost an estimated 2.3 trillion won ($1.7 billion) on leveraged products linked to Samsung Electronics and SK Hynix between May 27 and August 14.
The losses were reported by the office of opposition lawmaker Choi Eun-seok and involved clients of 10 Korean brokerages.
Leveraged ETFs target multiples of an underlying asset’s daily return, so compounding and volatility can make longer-term results differ sharply from those multiples.
After the market reversed in July, SK Hynix fell about 35% and Samsung Electronics about 21%; a major 2x SK Hynix fund lost about 82% from its June peak by July 29.
In India, SEBI found that over 91% of individual derivatives traders lost money in FY25, with net losses of about ₹1.06 lakh crore.
- Who
- Retail investors using leveraged products linked to Samsung Electronics and SK Hynix.
- What
- They were estimated to have lost 2.3 trillion won ($1.7 billion) between May 27 and August 14.
- When
- The reported losses occurred from May 27 to August 14; the market reversal was in July.
- Where
- South Korea; the article also discusses risks for investors in India.
- Why
- Leveraged products magnify daily gains and losses, and the underlying chip stocks fell sharply after a surge in leveraged bets.
- Estimated losses
- 2.3 trillion won ($1.7 billion), according to Choi Eun-seok’s office.
- Loss period
- May 27 to August 14.
- Brokerages involved
- Clients of 10 Korean brokerages.
- Products
- Single-stock leveraged ETFs and notes linked to Samsung Electronics and SK Hynix.
- Reported stock declines
- SK Hynix fell about 35% and Samsung Electronics about 21% when the market reversed in July, according to Sidharth Sogani Jain.
- South Korean rule changes
- The minimum cash deposit rose from 10 million won to 30 million won; education and mock trading became compulsory.
- India derivatives losses
- SEBI found that over 91% of individual derivatives traders lost money in FY25; net losses were about ₹1.06 lakh crore.