Korean retail investors lose $38.7B on single-stock leveraged ETFs

Citi estimates Korean retail investors have lost roughly $38.7 billion, or about 56 trillion won, on single-stock leveraged ETFs during the past month of market turmoil. The products launched on May 27 and have since become the center of a political and regulatory firestorm in Seoul.

What Citi is seeing

Citi strategist Mohamed Apabhai said the market capitalization of leveraged ETFs tied to Korean assets peaked at $52.5 billion on June 22, then fell to $19 billion within a month, a $33.5 billion decline from the peak.

Even as market cap fell by $33.5 billion, investors poured an additional $6.2 billion into the products, pushing Citi’s estimated cumulative retail losses to $38.7 billion.

Leveraged ETFs tracking SK Hynix saw the largest hit, with market cap shrinking $17 billion from the peak. Leveraged Kospi 200 products lost $10.5 billion, and leveraged Samsung Electronics ETFs shed more than $5 billion.

How the products blew up

The FSC approved single-stock leveraged ETFs on January 30, 2026 as part of an effort to modernize markets and keep domestic capital from flowing overseas. The ETFs began trading on May 27 with leverage capped at two times the daily move of the underlying stock, letting investors bet on single names like Samsung Electronics and SK Hynix rather than a broad index.

Retail piled in with net purchases of 14 trillion won, or roughly $9.7 billion, compared with about 2 trillion won from foreign investors, according to KB Financial Group. The hardest-hit chip ETFs have lost over 80% and nearly 75% from their highs.

The products have magnified gains and losses in some of the country’s most heavily traded shares, contributing to abrupt reversals across the broader market. Bloomberg ETF analyst Eric Balchunas noted Korea is not well suited to such products because the underlying shares are less liquid than those in larger markets, warning that “the tail can wag the dog more easily.”

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Political fallout in Seoul

Finance Minister Koo Yun-cheol apologized to parliament on July 29 after the collapse of the new single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix, and FSC Chairman Lee Eog-weon also apologized during a separate hearing, saying he regretted failing to meet the public’s expectations.

Starting July 31, financial authorities will require a basic deposit of 30 million won in cash from investors in single-stock leveraged products, applying to both new and existing investors buying more. The government has also temporarily suspended new listings of single-stock products and banned their advertising.

The margin debt angle

Despite the carnage, debt-fueled investing has been ticking back up. The margin loan balance bottomed at 32.67 trillion won on July 24 and edged back to 33.19 trillion won by July 28, per the Korea Financial Investment Association.

Citi’s Apabhai estimated liquidation of Korean stock market credit positions since the start of the year is about 65% complete, suggesting individuals kept buying into the decline and slowed the pace of unwind.

Options market and stocks to watch

Watch for continued volatility in these names and related U.S.-listed exposure:

SSNLF (Samsung Electronics): The single-stock leveraged ETF unwind has directly pressured shares; watch for follow-through as forced selling continues.

NVDA: Any sustained weakness in Korean chip names historically bleeds into global semi sentiment. Watch for reaction to Samsung and SK Hynix headlines.

EWY: The iShares MSCI South Korea ETF is a direct read on Kospi risk; watch for flow as retail deleveraging plays out.

SMH: Broad semis basket with exposure to the same AI-chip narrative that fueled the Korean leveraged trade. Watch for correlation moves.

SOXX: Another semi ETF worth monitoring for contagion from the Korean chip rout.

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