[Edaily Reporter Shin Ha-yeon ] The shift of funds toward the KOSDAQ market has become even more pronounced following the tightening of regulations on single-stock leveraged exchange-traded funds (ETFs). As funds that had been concentrated in single-stock leveraged ETFs tracking large-cap stocks—such as SamsungElectronics(005930) andSK hynix(000660) —have shifted to KOSDAQ spot stocks and KOSDAQ leveraged ETFs, the returns on these products have soared to around 60% in a short period.

According to the Korea Exchange on the 9th, the top five ETFs by percentage gain from July 31 to August 7 were all KOSDAQ leveraged products. “RISE KOSDAQ 150 Futures Leveraged” recorded the highest gain at 63.00%, followed by “HANARO KOSDAQ 150 Futures Leveraged” (62.42%), “KODEX KOSDAQ 150 Leverage” (61.41%), “TIGER KOSDAQ 150 Leverage” (60.72%), and “KIWOOM KOSDAQ 150 Futures Leverage” (59.05%) followed.

During the same period, the KOSDAQ Index rose 23.89%, nearly double the KOSPI’s gain of 11.89%. This means that leveraged ETFs, which track the KOSDAQ 150 Index at twice its level, fully amplified and reflected the index’s rebound.

The background to this rebound is attributed to changes in supply and demand following the regulation on single-stock leveraged ETFs. Previously, financial authorities raised the minimum deposit requirement for single-stock leveraged ETFs from 10 million won to 30 million won, effective July 31. Analysts note that as trading in single-stock leveraged ETFs—which had been draining liquidity from the KOSDAQ market prior to the regulation—plummeted, funds are relatively flowing back into the KOSDAQ market.

In fact, trading volume for the 16 single-stock leveraged ETFs plummeted from 12.4485 trillion won on July 30—the day before the regulation took effect—to 3.1518 trillion won on the first day of implementation. The downward trend continued, falling to 845.2 billion won on the 7th. In contrast, the KOSDAQ’s average daily trading volume, which had shrunk to 4.4929 trillion won on July 30, has been showing signs of recovery in line with the recent market rebound.

Fund inflows have also shifted toward KOSDAQ ETFs. From the 31st of last month through the 6th of this month, the “KODEX KOSDAQ 150” saw net inflows of 423.7 billion won, while the “KODEX KOSDAQ 150 Leverage” saw net inflows of 181.7 billion won. These figures rank second and fifth, respectively, among all ETFs. In contrast, single-stock leveraged ETFs—which had previously dominated the top ranks of capital inflows before the regulations—barely made it into the top 100, with the exception of the “1Q SK hynix Futures Single-Stock Leveraged ETF,” which ranked 82nd with 4.4 billion won.

The securities industry views the regulations on single-stock leverage ETFs as a catalyst for the KOSDAQ rebound. Park Woo-yeol, an analyst at Shinhan Investment Securities, noted, “The 16 single-stock leverage ETFs had been absorbing liquidity from the KOSDAQ market, exacerbating the decline in trading volume and market slump; however, with the recent decrease in trading of these ETFs, it is reasonable to expect a reversal of the KOSDAQ’s oversold position.”

Kwon Beom-seok, a senior researcher at SamsungSecurities, also noted, “The absorption of market funds by single-stock leveraged products has been cited as one of the main factors behind the KOSDAQ’s sharp decline. However, following the regulations, an increase in funds surrounding the stock market—such as customer deposits—has created a favorable environment for KOSDAQ supply and demand.”

Meanwhile, the market is also expressing caution regarding the “balloon effect.” There are concerns that if speculative funds that had been concentrated in single-stock leveraged trading shift to KOSDAQ index-based leveraged ETFs, this could lead to an increase in volatility in a different form rather than resolving the concentration issue.

A securities industry official noted, “The diversification of funds that had been concentrated on single-stock leveraged products toward the KOSDAQ and small- and mid-cap stocks is positive in terms of alleviating market concentration,” but added, “If the trend of funds seeking short-term high returns shifting between leveraged products intensifies, it could actually increase index volatility.”