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South Korea launched 16 single-stock leveraged ETFs on May 27, 2026, and the experiment went from promising to cautionary tale in under a month. The funds, built around Samsung Electronics and SK Hynix, pulled in assets so fast that regulators publicly said they wished they’d never approved them.
That’s not a paraphrase. Financial Supervisory Service Governor Lee Chan-jin said on June 22, 2026, that he regretted greenlighting these products. Markets listened. The following day, specific ETFs dropped more than 25%, the KOSPI triggered a circuit breaker, and the shockwaves reached US Nasdaq futures and major semiconductor names.
How $3 billion became $9.1 billion in weeks
At launch, the 16 ETFs held a combined roughly $3 billion in assets. Within weeks, that figure climbed to approximately $9.1 billion, or about 14 trillion Korean won. About 92% of the ETF holders were individual, non-institutional buyers.
The broader South Korean leveraged ETF market tells an even bigger story. Total assets under management in that category reached a record roughly $45 billion by early July 2026, representing around 800% year-to-date growth.
Margin debt followed the asset growth upward. By the end of May, margin borrowing tied to these products reached approximately 60 trillion won, or about $39 billion.
The anatomy of a sell-off
Governor Lee’s June 22 comments were the match. The resulting sell-off was severe enough to halt the KOSPI entirely via circuit breaker. Certain ETFs fell more than 25% in the aftermath. The contagion didn’t stay contained to Korea. US Nasdaq futures moved on the news, and global semiconductor stocks felt the pressure.
These products drew direct inspiration from Hong Kong’s CSOP 2x SK Hynix ETF, which launched in October 2025 and accumulated more than $14 billion in assets under management. Korea took the template and scaled it aggressively, launching 16 products simultaneously rather than testing with one.
What this means for investors
For investors with exposure to Korean equities or global semiconductor stocks, the regulatory posture of the FSS is now a live risk variable. Governor Lee’s public regret signals that tighter rules, position limits, or outright product restrictions could follow. By July 2026, ongoing volatility led to calls from lawmakers for regulatory curbs or even the delisting of these newly introduced products.
Samsung Electronics and SK Hynix are companies that often represent over 40% of the KOSPI. Daily rebalancing strategies employed by these leveraged products amplified price movements, raising alarms among financial regulators about wealth destruction and the potential for a market crisis.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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