South Korean ETF assets declined for the first time in 2024, dropping from 393 trillion won at June end to 354 trillion won as of July 26, per FnGuide data released on July 28. Leveraged ETF assets surged from 14.9 trillion won in late May to 30.1 trillion won by July 27, as retail investors concentrated bets on single-stock leveraged products despite Samsung Electronics and SK Hynix falling over 10 percent. Analysts attribute the divergence to 'buying-the-dip' demand and volatility-seeking behavior overtaking defensive strategies during the KOSPI correction.
Korean ETF Market Records First Asset Decline Since January
Total assets under management for 1,150 listed ETFs in South Korea fell from 393.7674 trillion won at June end to 354.6433 trillion won as of July 26, according to FnGuide. The decline marks the first monthly decrease after consecutive gains from January through June. Assets had risen from 307.2998 trillion won at April end to 393 trillion won by June end — a near-90 trillion won increase in two months — before reversing course alongside the KOSPI index correction. The outflow coincided with increased net purchases of US-listed ETFs and individual stocks by Korean retail investors, signaling capital rotation away from domestic equities. Inverse ETF profit-taking and liquidation volumes compounded the withdrawal, per market observers.
Leveraged ETF Assets Surge 15 Trillion Won in Two Months
Leveraged ETF assets climbed from 14.9223 trillion won at May end to 24.2864 trillion won at June end, then accelerated to 30.1862 trillion won by July 27 — a cumulative increase exceeding 15 trillion won over two months. The 62 leveraged products represent 5.4 percent of total listed ETFs but captured disproportionate inflows during the period. Monthly increases prior to June had averaged several hundred billion won, making the consecutive 2-trillion-won-plus gains in June and July an anomaly. Single-stock leveraged ETFs accounted for the bulk of inflows: KODEX SK Hynix Single Stock Leverage added 1.93 trillion won in July, TIGER SK Hynix Single Stock Leverage gained 1.0995 trillion won, and KODEX KOSDAQ150 Leverage rose 1.031 trillion won — the top three inflow recipients for the month. Assets under management figures reflect principal contributions from investors and exclude price fluctuations, distinguishing them from net asset value metrics.
Retail Investors Concentrate on Single-Stock Leverage Amid Volatility
Yoon Jae-hong, researcher at Mirae Asset Securities, stated that "single-stock leverage has driven overall leveraged ETF demand growth," while noting "investor interest in general thematic ETFs remains subdued." The 14 single-stock leveraged ETF products increased assets even as underlying stocks Samsung Electronics and SK Hynix extended declines beyond 10 percent, with share prices for some leveraged products falling to the 8,000 won range. Park Seung-jin, researcher at Hana Securities, interpreted the inflows as "low-price buying and averaging-down demand concentrating among individual investors," adding that "heightened volatility may appear attractive to leveraged ETF participants." Defensive thematic ETFs, including financials and high-dividend products that typically attract capital during turbulent periods, recorded minimal inflows as concentrated and leveraged strategies absorbed available liquidity.
FAQ
What caused South Korean ETF assets to decline in July 2024?
Total ETF assets fell from 393 trillion won at June end to 354 trillion won as of July 26 due to the KOSPI correction, retail investor rotation into US-listed securities, and inverse ETF profit-taking combined with liquidation volumes.
Which leveraged ETF products saw the largest inflows in July 2024?
KODEX SK Hynix Single Stock Leverage led with 1.93 trillion won in new assets, followed by TIGER SK Hynix Single Stock Leverage at 1.0995 trillion won and KODEX KOSDAQ150 Leverage at 1.031 trillion won — the top three recipients for the month.
