"My Account Is Melting" "Can I Even Recover My Principal?"... Single-Stock Leverage Falls Below Listing Price

Significant Losses for Samsung Electronics and SK hynix Leverage Products
Negative Compounding Effect Intensifies as Volatility Increases

It has been found that the majority of single-stock leveraged products listed on the domestic stock market have fallen below their listing prices. Due to the recent extreme volatility in the stock market, investors in leveraged products appear to be suffering even greater losses.

According to Yonhap News Agency, on July 7, Samsung Electronics and SK hynix single-stock leverage products plunged by about 12% to 13%. As a result, 13 out of 14 single-stock leveraged products dropped below their initial listing prices.

Samsung Electronics, SK hynix single-stock leverage. The Asia Business Daily DB

On this day, shares of Samsung Electronics and SK hynix each closed down by more than 6%. The declines in the 14 single-stock leveraged products were twice as large, reaching 12% to 13%. Among them, the seven Samsung Electronics leverage products recorded declines in the 13% range, while the seven SK hynix products showed drops in the 12% range. During intraday trading, the decline rates for these products reached around 20%.

KODEX Samsung Electronics Single-Stock Leverage at one point fell to 17,100 won, marking the second-lowest intraday price since its listing after hitting 17,000 won on July 2. TIGER Samsung Electronics Single-Stock Leverage also slipped to 15,705 won, which was the lowest since 15,525 won on July 2.

On this day, the KOSPI fell sharply due to the steep declines of Samsung Electronics and SK hynix, which are ranked first and second in market capitalization. In the morning, a sidecar (temporary suspension of program sell orders) was triggered, and in the afternoon, as the decline deepened, a circuit breaker was also activated, temporarily halting trading. However, after plunging more than 8%, buying on dips led to some recovery, trimming the losses somewhat before the market closed.

Deputy Prime Minister and Minister of Finance and Economy Koo Yoonchul is reporting to the Budget and Economic Planning Committee at the National Assembly on the 7th. Photo by Hyunmin Kim

This extreme volatility poses the risk of single-stock leveraged products falling even further below the price of the underlying stocks. This is due to the so-called negative compounding effect, which erodes principal. As a result, investors' losses are mounting. In single-stock leverage investor communities, more investors are expressing fear, saying things like, "My investment keeps melting away," and, "I'm not sure if I'll ever recover my principal."

Against this backdrop, Deputy Prime Minister and Minister of Finance and Economy Koo Yoonchul stated at the full meeting of the National Assembly's Budget and Economic Planning Committee on July 7, "We are well aware of the concerns that leveraged ETFs are increasing volatility in the stock market," and added, "We are currently discussing ways to address and minimize the issue."

This content was produced with the assistance of AI translation services.