Korea Single-Stock Leverage ETF Volumes Drop Below 1 Trillion Won for Two Days

South Korean single-stock leverage and inverse ETF trading volumes fell below 1 trillion won for two consecutive days following stricter margin rules, signaling a sharp cooling in domestic retail interest.

Woofun AI reports that trading volumes for 16 single-stock leverage and inverse ETFs in South Korea remained under 1 trillion won for two consecutive days, recording 919.8 billion won on August 6 and 941.2 billion won on August 7. This decline follows the implementation of new regulations on July 31, which raised the initial cash margin requirement for individual investors from 10 million won to 30 million won. Prior to the rule change, volumes peaked at 12.45 trillion won on July 30, dropping to 3.15 trillion won on the first day of enforcement. The market share of these products in the overall ETF sector fell to 5.6% on August 7, down from a pre-regulation range of 30% to 40%.

However, analysts note that demand has shifted toward semiconductor leverage ETFs and overseas-listed products, a phenomenon described as 'regulatory arbitrage.' Jeong Hyun-jong of Korea Investment & Securities highlighted that while domestic single-stock leverage volumes declined, semiconductor leverage ETF activity increased, suggesting capital flow toward alternatives like the CSOP SK Hynix Daily (2x) Leveraged Product listed in Hong Kong.