A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 5,663.24 points on July 29, down 360.42 points, or 5.98 percent, from the previous trading session.YONHAP
Trading in single-stock leveraged exchange-traded funds (ETF) tied to Samsung Electronics and SK hynix has collapsed after financial regulators moved twice to rein in the products.
The share prices of the two chipmakers, however, are still swinging almost as widely as before, and some analysts say it is too early to judge how well the measures have worked.
Samsung fluctuated 6.89 percent in intraday trading on Tuesday, with yesterday's close serving as a base, and SK hynix 9.38 percent, figures from the Korea Exchange show.
SK hynix had been narrowing steadily. Its range fell from 24.06 percent last Wednesday to 12.28 percent Thursday, 9.98 percent Friday and 4.83 percent Monday, before widening back above 9 percent on Tuesday. Samsung followed the same path over those sessions. Its range eased from 20.45 percent to 11.51, 11.59 and 4.38 percent before climbing again.
Turnover of the ETFs has kept falling. Some 1.33 trillion won ($931.7 million) shifted with the 16 leveraged and inverse single-stock ETFs tied to the two companies on Tuesday, down 4.08 percent from 1.39 trillion won on Monday and 91.2 percent from 15.16 trillion won last Wednesday.
The drop followed a second package of supplementary measures announced that day that imposed tighter regulations, including a higher minimum deposit for trading and restrictions on transactions.
A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 6,358.95 points on Aug. 4, up 101.50 points, or 1.62 percent from the previous trading session.NEWS1
What the rules have done to volatility on the bourse is harder to establish.
"Market volatility is driven by a range of factors working together, not just leverage, including expectations for AI and the memory chip business and investor sentiment, so the effect of the regulations needs to be watched a little longer," said Kim Hak-kyun, head of research at Shinyoung Securities.
Leveraged ETFs acted as a trigger for the recent surges and drops, Kim said, but other forces have been at work over the same period: expectations of a recovery in the chip business, foreign investors turning net buyers and overseas hedge funds finishing their deleveraging.
BY KIM DA-YOUNG [cho.yongjun1@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
