"Only Benefited Foreigners"... Retail Investors Suffer 56 Trillion Won Losses on Leverage ETFs, Begging to "Just Recover Principal"

Domestic retail investors are reported to have suffered massive losses amounting to tens of trillions of won due to leverage exchange-traded fund (ETF) investments during the recent stock market correction.

According to the investment banking (IB) industry, Citi Global Markets stated in a market report targeting institutional investors that the market capitalization of leverage ETFs based on South Korean assets peaked at $52.5 billion (approximately 76.3 trillion won) on June 22, before plunging recently to around $19.0 billion (approximately 27.6 trillion won).

Taking into account new funds that flowed in after the price crash, the report estimated that the total losses incurred by retail investors in leverage ETFs reached approximately $38.7 billion (56.3 trillion won).

By stock, the market capitalization of the SK Hynix leverage ETF saw the largest drop, shrinking by over 24.7 trillion won from its peak, followed by KOSPI 200-tracking products and the Samsung Electronics leverage ETF.

Amid the stock market correction, retail investors continued their risky debt-financed investments and concentrated purchases on large-cap stocks.

Although the margin loan balance across both markets decreased from its peak to 32.7 trillion won, the liquidation of credit positions accumulated since the beginning of the year stood at only around 65%, keeping the level still high.

Despite the drop in stock prices, retail investors continued to buy semiconductor stocks, net-buying over 23 trillion won worth of SK Hynix, but they are analyzed to be recording significant valuation losses due to the sharp decline compared to their average purchase prices.

In contrast to the continuous buying by retail investors, foreign investors engaged in large-scale profit-taking, rapidly withdrawing funds from the South Korean stock market.

As of the 20th, over the past month, foreigners net-sold more than 40.2 trillion won worth of shares in the KOSPI market alone, focusing on large-cap stocks such as Samsung Electronics and SK Hynix, and their cumulative net selling for this year has surpassed 160 trillion won.

Citi noted that retail investors have not yet engaged in panic selling and that KOSPI 200 futures could potentially decline further, making it premature to shift to an optimistic view on the South Korean stock market.

(Reported by Lee Hyeon-yeong | Video by Choi Gang-san | Graphics by Yang Hye-min | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.