It has been reported that approximately 7 trillion won has flowed into 16 single-stock leveraged exchange-traded funds (ETFs) tracking Samsung Electronics and SK Hynix over the past month.

Attention is now focused on whether the influx of investment funds will decrease as financial authorities have significantly raised the entry barriers for these products to reduce stock market volatility.

According to the Korea Exchange and ETF CHECK on Friday (July 17), a total of 7.3364 trillion won in net funds flowed into 16 single-stock leveraged and inverse ETFs between June 16 and July 15.

By product, the KODEX SK Hynix Single-Stock Leveraged ETF saw an inflow of 3.4472 trillion won, followed by the KODEX Samsung Electronics Single-Stock Leveraged ETF (1.5083 trillion won) and the TIGER SK Hynix Single-Stock Leveraged ETF (1.4271 trillion won) in second and third place, respectively.

Despite a sharp decline in the share prices of the underlying stocks, Samsung Electronics and SK Hynix, funds continued to pour into the single-stock leveraged products. Between June 16 and July 16, SK Hynix fell by 19.49 percent, and Samsung Electronics dropped by 24.33 percent.

During the same period, the KODEX SK Hynix Single-Stock Leveraged ETF and the KODEX Samsung Electronics Single-Stock Leveraged ETF, which saw the largest net inflows, declined by 45.60 percent and 48.44 percent, respectively.

Over the past month, individual investors net purchased 4.2386 trillion won worth of the seven SK Hynix single-stock leveraged products combined, and 1.6119 trillion won worth of the seven Samsung Electronics single-stock leveraged products.

Foreign investors also net purchased 859.5 billion won and 724.2 billion won, respectively, but their volume was significantly lower than that of individual investors.

Institutional investors were net sellers, with 5.1713 trillion won and 2.2671 trillion won in net sales, respectively.

As retail investors flocked to these single-stock leveraged products, the government announced measures to raise the minimum deposit requirement for investing in these products from 10 million won to 30 million won, effective from August 5.

With the tightening of the minimum deposit requirement, it is expected that investment demand will decrease, potentially reducing the combined market capitalization of single-stock leveraged products—currently at about 12 trillion won—to one-third of its current level, or 4 to 5 trillion won. These measures are scheduled to be implemented in November.

In addition, the mandatory education time for investing in single-stock leveraged products will be increased from two hours to three hours, and new listings of such products will be temporarily suspended until the market stabilizes.

While the securities industry agrees with the intention to curb speculative trading, it has expressed concerns that the measures could lead to side effects that dampen the market.

One industry official noted, "It is a policy suitable for the purpose of reducing trading while minimizing the shock to the market and investors," but added, "However, there is concern that supply and demand in the KOSDAQ market could become further complicated, as investors might sell individual stocks and then purchase leveraged products following the increase in the minimum deposit requirement."

Another industry official said, "Restricting purchase quantities to 20 shares and requiring deposits to be held only in cash could block normal risk-hedging tools for individual investors, potentially causing a sharp contraction in the market," adding, "There is a risk of a balloon effect where the growth momentum of the nascent domestic single-stock leveraged market is lost, leading to further capital flight toward overseas investments."