[Edaily Reporter Kim Hyung-il ] As the domestic stock market continues to experience sharp declines, retail investors have been buying exchange-traded funds (ETFs), pushing this year’s net purchases past 80 trillion won. Notably, since the start of this month, net buying has even extended to single-stock leveraged products that track the price movements of SamsungElectronics(005930)and SK hynix(000660)at double the rate. Analysts suggest that bargain-hunting is flowing into the market as investors anticipate a stock market rebound.

According to the Korea Exchange on the 25th, the total value of net ETF purchases by retail investors from the start of this year through the 23rd stood at 80.0191 trillion won. Considering that last year’s annual net purchase volume was 35.2125 trillion won, this figure is more than double that amount. Compared to the 100 trillion won in net stock purchases by retail investors on the exchange during the same period, the volume of net ETF purchases accounts for approximately 80 percent.

Retail investors’ buying momentum in ETFs continued even amid a downturn in the domestic stock market. The KOSPI, after surpassing the 9,000 mark based on the closing price last June, continued its downward trend and fell to the 5,500 level, while the total net assets of ETFs, which had once exceeded 500 trillion won, decreased to approximately 420 trillion won. Following net purchases of approximately 61 trillion won in ETFs during the first half of this year, retail investors purchased about 19 trillion won worth of ETFs over the course of roughly four months in the second half. Although the intensity of buying has weakened somewhat, the cumulative net purchase amount surpassed 80 trillion won for the first time in history.

The ETF most heavily purchased by retail investors this year was the TIGER U.S. S&P 500, with net purchases totaling 5.2003 trillion won. This was followed by the KOSDAQ 150 Leverage ETF at 3.5150 trillion won, while the KODEX 200 and KODEX NASDAQ 100 saw net purchases of 3.4426 trillion won and 3.3947 trillion won, respectively.

Recently, buying momentum has also spread to leveraged ETFs. According to data from the Korea Exchange and Koscom CHECK, from the 1st to the 23rd, retail investors made net purchases totaling 315.4 billion won in 14 single-stock leveraged ETFs—excluding 2x inverse products—tracking SamsungElectronics and SK hynix. They purchased 7 SK hynix-related products worth 226.3 billion won and 7 SamsungElectronics-related products worth 89.1 billion won.

This marks the first time retail investors have made net purchases of single-stock leveraged ETFs since regulations were tightened in July. While retail investors made net purchases of 2.7728 trillion won worth of these 14 products in July, they made net sales of 648.4 billion won in August and 497.9 billion won in September after margin requirements were tightened starting on the 31st of that month. The shift back to net buying this month is interpreted as reflecting expectations of a rebound following the recent sharp decline in the stock market.

By product, retail investors’ net purchases of the KODEX SK hynix Single-Stock Leverage ETF totaled 152.9 billion won. This ranks 11th among domestically listed ETFs in terms of retail net purchases. In addition to single-stock products, retail investors also made net purchases of 1.0448 trillion won and 256.4 billion won in the KODEX Leverage and KODEX Semiconductor Leverage ETFs, respectively. As the KOSPI fell 18.83% between the 1st and 23rd of this month, investment demand appears to have grown as investors sought a rebound in the index and semiconductor stocks.

In contrast, foreign investors showed a different pattern from retail investors in individual products. The ETF with the highest net purchases by foreign investors this year was the TIGER MSCI Korea TR, which diversifies investments across leading domestic companies such as SamsungElectronics and SK hynix, with net purchases totaling 1.6284 trillion won. Foreign investors also made net purchases of 1.1583 trillion won in the TIGER U.S. Nasdaq 100. They also purchased KODEX Leverage and KODEX 200 in amounts of 962.7 billion won and 770.1 billion won, respectively.

Foreign investors also appeared to diversify their strategies by buying both leverage and inverse products. They made net purchases of 148.3 billion won in KODEX Leverage—the second-largest amount among ETFs—and also made net purchases of 51.3 billion won in KODEX 200 Futures Inverse 2X, which tracks the daily return of the KOSPI 200 in the opposite direction at double the rate. In contrast, they made net sales of 48.8 billion won in 14 single-stock leveraged ETFs this month. While they made net sales of 50.8 billion won in SK hynix-related products, they made net purchases of 2 billion won in SamsungElectronics-related products.

However, since leveraged products track price fluctuations of the underlying asset by a certain multiple, the range of gains and losses can widen depending on the market direction. In particular, if stock prices fluctuate repeatedly, the cumulative return of a leveraged ETF may still result in a loss even if the underlying asset returns to its original level over a certain period.

A securities industry official stated, “Even if investors purchase leveraged ETFs expecting a short-term stock price rebound, losses may exceed expectations if market volatility increases,” adding, “It is necessary to approach these investments cautiously, taking into account the investment horizon and one’s risk tolerance.”