Regulatory Clampdown Triggers Nearly $1B Outflows From South Korea’s Leveraged Chip ETFs

South Korean investors withdrew close to $1 billion this month from leveraged exchange-traded funds tied to the nation’s top chipmakers, bringing a sharp end to one of the most extreme boom-and-bust episodes seen in recent ETF markets. The products, which provided 2x leveraged exposure to Samsung Electronics and SK Hynix, debuted at the end of May 2026 and quickly attracted heavy retail demand. In roughly two months, investors funneled about 14 trillion won (around $9.7 billion) into the funds, pushing combined assets under management to roughly $28 billion. Losses accelerated as the trade unraveled. The KODEX SK Hynix Single Stock Leverage ETF has fallen more than 80% from its June 23 peak, while the Samsung-linked version is down about 75% from its June 3 high. In late July, South Korea’s finance minister issued a public apology, saying safeguards around the products had been insufficient. Regulators then tripled the minimum cash requirement for investors to 30 million won, suspended new leveraged single-stock ETF listings, and tightened retail access. Trading volumes collapsed as the new rules took hold. Daily turnover for the leveraged ETFs dropped more than 90%. Combined turnover was 12.45 trillion won on July 30, then slid to below 1 trillion won shortly afterward. Turnover for the KODEX SK Hynix product alone fell from 1.3 trillion won to 560 billion won by Aug. 3. The abrupt slowdown is reverberating through South Korea’s broader ETF market. A product category that had been generating some of the market’s highest volumes has left a visible gap for market makers, brokerages and exchanges. The minister’s apology has also raised questions about whether the approval process adequately accounted for the risk of retail investors crowding into highly leveraged trades at the worst possible time. Cumulative losses across leveraged ETFs have reached into the trillions of won.