Investing.com — South Korea is set to launch its first single-stock leveraged exchange-traded funds this week, offering investors products linked to semiconductor giants and that aim to deliver twice the daily performance of the underlying shares, Bloomberg reported on Sunday.
The new ETFs will provide leveraged exposure to two of the country’s largest companies, both of which have been major beneficiaries of growing demand for artificial intelligence-related chips.
The launch comes as South Korean regulators seek to attract retail trading activity back to domestic markets after investors increasingly turned to overseas-listed leveraged products tied to local stocks.
South Korea has more than 14 million retail investors, and analysts expect strong demand for the new funds amid continued enthusiasm for AI-related investments.
Leveraged ETFs use derivatives and other financial instruments to amplify the daily performance of an underlying asset. While they can magnify gains, they can also increase losses and contribute to higher market volatility.
South Korean investors have already been active buyers of leveraged products linked to semiconductor stocks.
Bloomberg reported that a Hong Kong-listed leveraged ETF tied to Samsung Electronics has attracted about $1.3 billion in net inflows this year, while a similar leveraged fund linked to SK Hynix has drawn roughly the same amount and has become the world’s largest single-stock leveraged ETF.
Market participants have previously linked rebalancing activity from leveraged products to periods of heightened trading volatility in Korean semiconductor shares.
The report cited estimates from Barclays showing that rebalancing activity accounted for roughly 17% of SK Hynix’s daily trading volume and 10% of Samsung’s volume during a sharp market selloff on May 15.
South Korea’s Financial Supervisory Service has cautioned investors about the risks associated with leveraged products and the potential for amplified losses.
Analysts estimate that net inflows into 14 leveraged ETFs tied to Samsung and SK Hynix could reach as much as 5.3 trillion won ($3.5 billion).
Around 300,000 investors completed the mandatory training required for leveraged ETF investing during the first two months of this year, exceeding the total recorded in 2025.