On First Day of Single-Stock Leverage Collateral Hike: Trading Volume Drops, Retail Investors Become 'Sellers'

Trading Volume Drops to One-Fourth of Previous Day
Hynix Leverage Product Hits Upper Price Limit
Retail Investors Sell and Turn to 'Inverse' Products

On the first day that the basic cash collateral requirement for single-stock leveraged products was raised to 30 million won, trading volume significantly declined, despite a rapid market surge. Two-times leveraged products hit their upper price limits, while “geopverse” products posted lower limits. Individual investors sold single-stock leveraged products and aggressively purchased index inverse products.

According to the Korea Exchange and ETF Check on July 31, the trading volume for KODEX SK hynix Single-Stock Leverage product reached 116.92 million units, with a trading value of 1.1967 trillion won. This product ranked fifth among all ETFs in both trading volume and value that day. The combined trading volume for the 16 single-stock leveraged and inverse products totaled approximately 302.34 million units, with a trading value of about 3.0533 trillion won.

Both trading volume and value fell considerably. On this day, the trading volume and value of single-stock ETPs were only about a quarter of the previous day’s combined total—1.22621 billion units and 12.4485 trillion won, respectively. This marked a sharp decline compared to the average since the listing of single-stock leveraged products on May 27, which had been 675.57 million units in volume and 11.6787 trillion won in value until the previous day.

During the early session—until 10:00 a.m.—the trading value for the 16 single-stock leveraged products was around 1.5 trillion won. Based on a simple time-based calculation, it was estimated that trading value could reach around 9 trillion won, but the actual figure ended up at just around 3 trillion won. Trading was concentrated during the initial surge, with a gradual decrease in volume during the sideways movement that followed.

Starting this day, the financial authorities raised the basic collateral required for single-stock leveraged products from 10 million won to 30 million won. In addition, substitute securities—stocks, ETFs, bonds, etc.—which had previously been recognized for up to 70% of collateral calculations, will now be excluded. Notably, even if substitute securities are sold, the cash will only be recognized as collateral on the settlement date (T+2), not on the day of sale (T day), once the transaction is completed and the cash is deposited.

Driven by a strong rebound in the semiconductor sector, single-stock leveraged products surged by as much as nearly 60% on the day. The KODEX SK hynix Single-Stock Leverage product spiked as much as 59.93% during the session, hitting the upper price limit of 11,185 won. TIGER SK hynix Single-Stock Leverage also jumped more than 59%, reaching its upper limit at 9,450 won. In contrast, the SOL SK hynix Futures Single-Stock Inverse 2X, a two-times inverse product, dropped 59.95% to close at its lower price limit of 7,695 won.

Individual investors sold single-stock leveraged products to realize gains, switching to “inverse” products to bet on a market decline. The KODEX SK hynix Single-Stock Leverage product topped the list of net sales by individuals at 587.9 billion won. KODEX Samsung Electronics Single-Stock Leverage was also heavily sold by individuals, ranking fourth in net sales with 215.6 billion won. The top purchases by individuals were KODEX 200 Futures Inverse 2X (371.5 billion won) and KODEX Inverse (111.1 billion won), ranking first and second, respectively.

Following the new regulations on single-stock leverage, the industry anticipates that the concentration in “SamjeonNix”—a term referring to Samsung Electronics and SK hynix—will ease and rotational trading will expand. Jae Seung Kim, researcher at Hyundai Motor Securities, commented, “Since May, the proportion of single-stock leveraged trading in the domestic equity-type ETF market has grown, intensifying concentration within the KOSPI. As the focus on single-stock leveraged products subsides, KOSPI’s ADR (advance-decline ratio) index is improving, and I expect greater rotational trading within the KOSPI going forward.”

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