South Korean version of "NVIDIA Leveraged" is coming? South Korea's first batch of Samsung and SK Hynix leveraged ETFs will be listed as soon as May.

The first single stock leveraged exchange-traded funds (ETFs) linked to leading companies in the chip industry in South Korea, such as Samsung Electronics and SK Hynix, are set to debut as early as May. It has been reported that large asset management companies like Samsung Asset Management and Mirae Asset Global Investments (Hong Kong) have been preparing to launch related products. Leveraged ETFs aim to achieve two to three times the daily performance of the underlying stocks or indexes, with both gains and losses amplified. Due to the high risk associated with such products, South Korea has so far banned the listing of single stock leveraged ETFs locally. However, this has led to risk-taking individual investors in South Korea flocking to similar products in Hong Kong. Over the past year, due to the demand for artificial intelligence-driven chips, the stock prices of Samsung and SK Hynix have doubled until the Iran war triggered market sentiment deterioration. In order to promote product diversification and allow day traders to engage in more leveraged trading, the Financial Services Commission of South Korea announced in January that it will expedite the approval process for single stock products. An official from the FSC stated that the regulatory agency is currently consulting with relevant parties based on the announcement made in January and is committed to ensuring a smooth system upgrade. However, the introduction of single stock leveraged ETFs may exacerbate market volatility, as these products will amplify the gains and losses of actively traded stocks. In South Korea, where individual investors dominate the market, this impact may be particularly significant as funds often concentrate on heavily weighted semiconductor stocks. The Financial Services Commission of South Korea stated in January that the leverage multiple will be limited to twice the price fluctuation of the underlying stock, rather than the expected three times. This means that if the stock price of the underlying stock changes by 1%, the leveraged fund price will change by approximately 2%, whether it rises or falls. It has been reported that to prevent excessive speculation and cutthroat competition, the regulatory agency may only allow each company to launch one such leveraged ETF product. For U.S. stock investors, this development not only represents a financial innovation in the South Korean domestic market, but also signals a deep restructuring of the global semiconductor asset liquidity structure. For a long time, U.S. stock market investors have been accustomed to high-frequency speculation through leveraged products of individual stocks like NVIDIA and Micron, but South Korea's move to open the floodgates indicates that leveraged trading of global chip stocks will achieve round-the-clock coverage, with the volatility during the Asian session being significantly amplified through these two times leveraged instruments. In terms of cross-border linkage effects, as benchmarks in the storage industry, the stock price trends of Samsung and SK Hynix are highly correlated with the NASDAQ 100 index and the Philadelphia Semiconductor Index (SOX). The debut of domestic leveraged ETFs in South Korea actually provides a more liquid "outpost" for global investors. Additionally, this move will have a profound impact on the distribution of capital flows in global semiconductor derivatives. Prior to this, due to the lack of single stock leveraged tools in South Korea, a large amount of high-risk seeking funds from South Korea and international markets flowed to Hong Kong or linked targets in the US market, and were even forced to search for similar alternatives in the U.S. market, which to some extent pushed up the premium levels of related semiconductor ETFs in the U.S. With the introduction of domestic products in South Korea, the funds chasing the fluctuations of Samsung and Hynix are expected to massively flow back to Seoul, thereby easing the passive buying pressure on related targets in the U.S. market.