Citi Estimates $56 Trillion Won Loss for Korean Retail Investors in Leveraged ETFs

Retail Investors Continue Buying Despite Market Downturn
SK hynix Faces 8 Trillion Won, Samsung Electronics 3 Trillion Won in Losses

In the midst of recent stock market volatility, an analysis has emerged estimating that retail investors have incurred losses amounting to $38.7 billion (approximately 56.3 trillion won) through leveraged exchange-traded fund (ETF) investments.

According to the investment banking (IB) industry on the 29th, Mohamed Apabhai, Head of Asia-Pacific Trading Strategy at Citi Global Markets Securities, stated in a market commentary for institutional investors the previous day that the market capitalization of leveraged ETFs based on Korean assets has recently shrunk to about $19 billion (around 27.64 trillion won). The market capitalization of Korean asset-based leveraged ETFs peaked at $52.5 billion (approximately 76.37 trillion won) on June 22.

Apabhai estimated that the total losses of retail investors in leveraged ETFs have reached about 56.3 trillion won. This figure accounts for the fact that, even after the market capitalization dropped by roughly $33.5 billion (around 48.7 trillion won) from its high, $6.2 billion (about 9.02 trillion won) of new investments were made.

In particular, the leveraged ETF tied to SK hynix saw the largest decrease in market capitalization, dropping by about $17 billion (approximately 24.74 trillion won) from its peak. The KOSPI 200 leveraged ETF declined by $10.5 billion (about 15.28 trillion won), while the Samsung Electronics leveraged ETF fell by over $5 billion (roughly 7.28 trillion won).

Apabhai forecasted that losses from leveraged ETFs may continue to grow through the end of the year. He noted, "The market capitalization of products related to leveraged ETFs could drop below $8 billion (around 1.163 trillion won) before year-end."

Furthermore, it was found that domestic retail investors are continuing to buy leading semiconductor stocks such as SK hynix even amid a declining market. Since June 23, individual investors have made net purchases of more than $16 billion (approximately 23.27 trillion won) in SK hynix. According to the commentary, it is estimated that losses from these purchases during this period amount to about $5.7 billion (around 8.3 trillion won).

According to Citi Global Markets Securities, the estimated average purchase price was 2.28 million won. As of 11:17 a.m. on this day, SK hynix was trading at 1,392,000 won, down 10.13% from the previous closing price.

During the same period, retail investors who purchased Samsung Electronics are estimated to have incurred losses of $2.4 billion (about 3.5 trillion won).

Apabhai said, “Retail investors have not yet begun panic selling,” and projected that it is too early to shift to an optimistic outlook for the KOSPI. He provided a base scenario in which KOSPI 200 futures fall to the 888 level and suggested that if this level is breached, the index could decline further to 754.6, reflecting macroeconomic variables.

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