#What are the new single-stock leveraged ETFs in South Korea?
South Korea is set to enhance the investment landscape for retail investors. On May 27, the country will introduce its first-ever single-stock leveraged Exchange Traded Funds (ETFs). These products will provide investors with 2x daily long exposure and 2x inverse exposure to two major corporations: Samsung Electronics and SK Hynix.
What details should you know about the launch?
A total of 16 new products will be launched, managed by eight domestic asset management firms, including well-known names such as Samsung Asset Management and Mirae Asset Global Investments. Each fund will start with a unit price of 20,000 won, approximately equivalent to $13.30. The design of these funds is straightforward, with a 2x leveraged ETF for Samsung Electronics aiming to achieve double the daily return of its stock, while the inverse version is designed to gain twice the decline.
Currently, only Samsung Electronics and SK Hynix are eligible for this type of investment under the revised Capital Markets Act. This act mandates that any qualifying stock must contribute at least 10% to the benchmark index’s total market capitalization and must have accounted for a minimum of 5% of trading volume in the previous three months.
Why has this taken until now to materialize?
Historically, South Korea has been cautious in allowing retail investors to access leveraged single-stock products. For those looking for leveraged exposure to these high-profile companies, the common solution was to seek options on foreign exchanges, with Hong Kong being a popular choice. Regulators ultimately favored keeping these activities domestically, allowing for better oversight and investor protection.