- Tighter regulation on leveraged ETFs tied to large semiconductor stocks is redirecting investment money into the Kosdaq market.
- The Kosdaq Index has risen more than 30% from its low, and repeated sidecars were triggered after a surge in Kosdaq futures.
- Since the rules took effect, investor interest has shifted to small- and mid-cap growth stocks, lifting the Kosdaq’s relative return against the Kospi to its highest since the dot-com bubble in 2000.
Forecast Trend Report by Period
Tighter rules on leveraged exchange-traded funds tied to South Korea’s large semiconductor stocks are pushing investor money into the Kosdaq market.
Bloomberg reported on Aug. 10 that the Kosdaq Index rose as much as 6.8% intraday. The gauge has climbed more than 30% from its low on July 30. A sharp jump in Kosdaq futures prompted the Korea Exchange to trigger a sidecar for the third time this month, temporarily suspending the validity of program buy orders.
Market participants say money leaving single-stock leveraged ETFs tied to Samsung Electronics Co. and SK Hynix Inc. is flowing into Kosdaq shares. Financial authorities recently tightened regulations on the products, including raising the minimum deposit requirement, to curb excessive leveraged bets by retail investors.
