Investing.com — South Korean retail investors are pulling back sharply from leveraged exchange-traded funds tied to and , with trading activity collapsing after regulators introduced tougher requirements, Bloomberg reported Sunday.
Trading value in ETFs designed to deliver twice the daily returns of the two chipmakers has fallen to just 4% of its June peak. The products have also recorded about $1 billion in combined outflows so far in August, putting them on course for their first monthly outflow.
A key deterrent has been a mandatory five-day simulated trading course introduced on Aug. 19. Investors must download a Windows-only program and spend at least one hour each day trading with virtual funds before gaining access to the products.
The requirement follows earlier measures, including a higher minimum deposit, aimed at cooling speculative activity that had contributed to sharp swings in South Korea’s stock market.
The leveraged ETFs were introduced in May as authorities sought to attract more retail investment into domestic equities. Demand quickly surged, with turnover in the products and their underlying Samsung Electronics and SK Hynix shares at one point accounting for more than 80% of total market trading.
Assets held by the leveraged ETFs have since dropped to about $5 billion as of Aug. 27, from a late-June peak of $11.4 billion. Global technology selloffs and concerns about AI spending and monetization have also weighed on demand.
Bloomberg Intelligence analyst Rebecca Sin said outflows could continue in the near term as regulators tighten restrictions.
The retreat has coincided with lower market volatility. has dropped to a four-month low near 50 from 97 in late June.
South Korea’s benchmark index remains up 61% this year, though it is about 25% below the record reached two months ago.