South Korea Leveraged Chip ETF Trading Plunges After New Rules

South Korean retail investors are rapidly retreating from leveraged exchange-traded funds linked to Samsung Electronics and SK Hynix after regulators imposed stricter trading requirements, Bloomberg reported Sunday.

Trading value in ETFs designed to generate twice the daily returns of South Korea’s two leading chipmakers has fallen to only 4% of its June peak. The leveraged ETFs have also suffered roughly $1 billion in combined outflows during August, putting them on track to record their first monthly net outflow.

The decline accelerated after regulators introduced a mandatory five-day simulated trading course on Aug. 19. Investors seeking access to the leveraged products must download a Windows-only program and spend at least one hour per day trading with virtual money before becoming eligible to invest.

The new requirement follows previous measures, including higher minimum deposit rules, as South Korean authorities attempt to curb speculative trading that contributed to significant stock market volatility.

Leveraged ETFs tracking Samsung Electronics and SK Hynix debuted in May as part of efforts to encourage greater retail participation in domestic equities. Investor interest initially surged. At one stage, trading in the ETFs and their underlying chip stocks accounted for more than 80% of total market turnover.

However, assets held by the leveraged ETFs dropped to approximately $5 billion as of Aug. 27, down sharply from a late-June peak of $11.4 billion. Weakness across global technology stocks and concerns over artificial intelligence spending and monetization have also reduced investor appetite.

Bloomberg Intelligence analyst Rebecca Sin said ETF outflows could persist in the near term as South Korean regulators continue tightening restrictions.

The pullback has occurred alongside declining market volatility. The Kospi volatility index has fallen to a four-month low near 50, compared with 97 in late June.

South Korea’s benchmark Kospi remains up about 61% in 2026 despite recent weakness. The index, however, is currently around 25% below the record high it reached two months ago, reflecting a sharp cooling in a market previously driven by strong retail enthusiasm and semiconductor-related trading.