The South Korean stock market has recently experienced significant volatility, with retail investors' ETF trading strategies reversing rapidly within a single day. On days when the index surged, retail investors heavily bought inverse ETFs and sold leveraged ETFs; conversely, on days when the index plummeted, they reversed course, buying leveraged ETFs and selling inverse ETFs, employing a typical contrarian investment strategy for two consecutive trading days.
According to data released on the 16th by Koscom and Timefolio Asset Management, the ETF with the highest net purchase amount by individual investors that day was the KODEX
SK Hynix single-stock leveraged ETF, with net purchases of 265 billion won; followed by the KODEX leveraged ETF (197.4 billion won) and the TIGER
SK Hynix single-stock leveraged ETF (124.1 billion won). On that day, the KOSPI index fell by 6.37%, and SK Hynix's stock price plummeted by 11.53%, yet retail funds flowed concentrated into previously heavily sold semiconductor leveraged products, taking the opportunity to buy at low prices. Conversely, the largest net selling by retail investors was of the KODEX 200 Futures Inverse 2x ETF, betting on a market downturn, with net selling of 136.3 billion won. Additionally, the SOL SK Hynix Futures Single-Stock Inverse 2x ETF (96.4 billion won) and the KODEX Inverse ETF (46.9 billion won) also ranked among the top net sellers.
Just the previous trading day (the 15th), retail investors' actions were almost entirely the opposite. Overall, retail investors sold leveraged products and bet on a market downturn when the market rose; after a market crash, they bought leveraged ETFs again and sold inverse ETFs, practicing a contrarian investment strategy of "buying on dips and selling on rallies." However, industry insiders also warn that single-stock leveraged ETFs are high-risk products. In the event of sharp market fluctuations, if the market direction is misjudged, the losses faced by investors can be magnified exponentially.
