Overview
- Two sets of 2x single-stock leveraged ETFs tracking Samsung and SK Hynix mechanically sold roughly $6 billion of shares when those stocks plunged, according to Bloomberg Intelligence reported in coverage of the June 23 trading session.
- Leveraged ETFs reset their exposure every day so a sharp fall in the underlying stock forces the funds to sell shares to restore target leverage which can double the selling pressure during volatile moves.
- South Korea’s Financial Supervisory Service governor Lee Chan-jin publicly said he regretted approving the ETFs and regulators have opened reviews of possible curbs on the products.
- The ETF-driven selling helped widen a semiconductor-sector decline that knocked Micron about 13% in a single day and renewed analyst warnings that the memory-chip upcycle could be fragile going into 2027.
- The 16 leveraged products gathered about $9 billion within weeks and are mostly held by retail investors, a concentration that raises risks for small investors and could prompt tighter trading limits or listing rules to curb future market amplification.