South Korea gave retail investors access to leveraged single-stock ETFs in late May. By mid-June, some of those products had cratered more than 20% in a single trading session. The country’s top financial regulator now says he regrets approving them.
How $9.1 billion piled in, then caught fire
South Korean regulators approved 2x leveraged ETFs tracking individual semiconductor stocks, specifically Samsung Electronics and SK Hynix, in April 2026. The products launched in late May. They were designed to deliver roughly twice the daily return of each underlying stock.
Retail investors piled in immediately. Assets in these ETFs ballooned from approximately $3 billion to around $9.1 billion within weeks. Retail traders accounted for about 92% of total holdings.
Then came mid-June. Concerns about the sustainability of AI spending, combined with wobbling memory chip prices, triggered a brutal selloff. Some SK Hynix-tracking leveraged ETFs dropped between 19.7% and 20.9% in a single day. The carnage was severe enough to trip circuit breakers on the KOSPI, South Korea’s main stock index. Over a 12-day stretch, domestic leveraged ETFs shed more than 2.6 trillion won, roughly $1.7 billion in paper losses.
