Japanese Media Targets Korean Semiconductor Stocks, Warns of Potential Impact on U.S. Market

As global memory semiconductor stocks experience repeated sharp fluctuations, a Japanese media outlet has pointed to South Korean leverage ETFs, which track the price movements of single stocks at a multiple, as the underlying cause. The Nihon Keizai Shimbun reported that the market for single-stock leverage ETFs has been growing rapidly, stating, "South Korea's SK Hynix is at the center of the leverage ETF controversy." The report identified the recent launch of various products tracking memory semiconductor stocks as a primary driver of market volatility. SK Hynix listed its American Depositary Receipts (ADRs) on the U.S. Nasdaq market on July 10. Although the stock price has fallen by approximately 25% from its peak, it remains more than three times higher than it was at the end of 2025. The public offering for SK Hynix's ADRs attracted subscriptions seven times the amount of the shares offered. According to financial data provider QUICK, the annualized volatility of SK Hynix over the past 20 days exceeds 110%. For comparison, the volatility of the S&P 500 is around 15%. The Nihon Keizai Shimbun emphasized that "this high volatility is due to the single-stock leverage ETFs launched in South Korea in May." Leverage ETFs are products that track twice the daily return of a stock index or an individual stock. The media outlet explained, "Rebalancing, which involves buying more when the stock price rises and selling more when it falls, is repeated mechanically, amplifying market trends. As capital inflows increase, the impact also grows." As of the end of June, the assets under management in the leverage ETF market exceeded 50 billion dollars, or approximately 75 trillion won, a 2.3-fold increase in just one year. The report added that because leverage ETFs are linked to the closing prices of their underlying assets, rebalancing trades are concentrated in a short period just before the market closes, further increasing volatility. The outlet warned, "What is concerning is the range of Hynix's stock price fluctuations," adding that "after the Nasdaq listing, it could more directly shake the U.S. stock market." The media also cited recent remarks by Financial Supervisory Service Governor Lee Chan-jin, who stated, "We should have blocked the launch of these leverage products, even if it meant lying down to stop them." From June 1 to July 10, three inverse products and two leverage products were included in the top five most traded ETFs.
※ Please note: This article was translated by AI and may contain errors.