South Korea Set to Launch 2x Single-Stock ETFs for Samsung Electronics, SK Hynix as Early as May 22
- South Korea will list 2x leveraged single-stock ETFs tied to Samsung Electronics and SK Hynix, expanding the range of leveraged investment products available at home.
- Domestically listed leveraged ETFs offer a tax advantage over overseas-listed ETFs, with a 15.4%% tax rate on trading gains.
- 2x leveraged single-stock ETFs are high-risk products because their volatility can magnify losses in declines and in sideways markets.
Forecast Trend Report by Period
[Noh Jung-dong’s Accidental Investor]
2x single-stock ETFs may debut as early as May 22
Only Samsung Electronics and SK Hynix meet the criteria
Leverage magnifies gains — and losses
Sideways markets can still erode returns
South Korea may launch exchange-traded funds that deliver twice the daily return of a single stock as early as May 22, with Samsung Electronics Co. and SK Hynix Inc. set to be the first underlying shares.
Investors who were left out of the semiconductor rally have welcomed the move as a way to catch up on returns more quickly. Others urge caution, saying leveraged products can magnify losses as easily as gains.
More 2x ETF options, but with risks
According to the financial investment industry on April 26, South Korea has for the first time allowed domestic listings of leveraged ETFs tied to a single local stock. The Cabinet on April 21 approved a revision to the enforcement decree of the Capital Markets Act allowing ETFs based on a single underlying stock.
Financial authorities set eligibility requirements for underlying assets with investor protection in mind. The rules require an average market-cap weighting of at least 10%, an average share of trading value of at least 5%, an eligible investment rating and a derivatives trading-volume share of at least 1%.
As of the first quarter, only Samsung Electronics, with about a 22% market-cap weighting, and SK Hynix, with about 15%, met those conditions.
Investors have been heading overseas for leverage
Until now, South Korean ETFs faced diversification rules that capped exposure to a single stock at 30%. Funds also had to hold at least 10 stocks.
As stock investment grew and demand for a wider range of products increased, Korean investors increasingly turned to overseas leveraged products.
Tesla Inc. is a prime example. During the Covid-19 pandemic, Korean retail investors poured into U.S. stocks and bought leveraged ETFs designed to track two or three times the move of the underlying asset. Koreans held 44% of Direxion Daily TSLA Bull 2X Shares, or TSLL, at the end of last year.
Korean retail investors also own 14.2% of the roughly $110 billion in net assets held by all U.S.-listed equity leveraged ETFs, underscoring strong demand for such products.
Questions were also raised about the policy’s effectiveness. In Hong Kong, asset manager CSOP launched leveraged ETFs tied to Samsung Electronics and SK Hynix last year, and the response has been strong enough for the products to rank within the top 50 by assets under custody.
According to the Korea Securities Depository, the third-most traded product by Korean investors in Hong Kong last month was a 2x Samsung Electronics leveraged ETF, with trading volume of $7.46 million. The 2x SK Hynix leveraged ETF was larger, at about $70 million.
CSOP Samsung Electronics Daily 2x Leveraged Product, which was listed in Hong Kong in May 2025, has returned about 302% over the past six months. Still, Korean investors have complained about foreign-exchange losses tied to moves in the won and the inconvenience of trading across time zones.
For regulators, listing the same products in South Korea would let investors trade them in won without cross-border capital flows, helping reduce exchange-rate volatility.
Domestic products also offer a tax advantage. Capital gains on overseas-listed ETFs are taxed at 22%, compared with 15.4% for domestically listed leveraged ETFs.
Big upside if the trade works — but the risks are steep
Some market participants are concerned about the volatility of single-stock products. They are high-risk instruments because the maximum daily swing can widen to 60% from 30% for the underlying shares. Leverage amplifies losses on the way down just as it boosts returns on the way up.
The risks of leveraged products also show up in sideways markets. If an underlying index falls 20% and then rises 20%, a regular investment would go from 1 million won to 800,000 won and then to 960,000 won, leaving a 4% loss. A leveraged product, by contrast, would fall from 1 million won to 600,000 won and then recover to 840,000 won, resulting in a 16% loss. In a choppy market, long-term investors in leveraged products can see losses deepen even without a clear trend.
Debate is already heating up on online stock forums. Some investors wrote that they could “make money twice as fast and buy a home before real estate prices rise further,” while others welcomed the chance to invest in a 2x SK Hynix product without foreign-exchange losses. Skeptics countered that gains may come twice as fast, but losses can mount even faster when the stock falls.
Noh Jung-dong, Hankyung.com reporter dong2@hankyung.com
