A semiconductor-led stock rout and tighter single-stock leveraged ETF rules halved early-August turnover, though Shinhan Securities says the pullback could help the KOSDAQ rebound from oversold levels.
South Korea's ETF market suffered a broad July rout as 891 domestically listed products, or 78.3% of the total, fell and 531 of those losers dropped more than 10%, while total net assets shrank by ₩77.9 trillion to ₩434.4 trillion. The drawdown tracked a semiconductor-led collapse in the KOSPI and the KOSDAQ, South Korea's tech-heavy junior market, with four KOSPI circuit breakers (temporary volatility halts) triggered in July and back-to-back halts on both markets on July 28 and 29. Samsung Electronics and SK Hynix posted steep losses as foreign investors sold a net ₩17.9 trillion across the KOSPI and KOSDAQ. Trading then cooled sharply in early August after tighter rules for single-stock leveraged ETFs (funds that amplify daily moves) lifted the basic deposit requirement to ₩30 million and barred substitute securities, cutting turnover in those products from ₩12.45 trillion on July 30 to ₩3.15 trillion on July 31 and to around ₩1 trillion thereafter. Shinhan Securities analyst Park Woo-yeol said the decline in leveraged activity may help the KOSDAQ recover from oversold conditions, even as retail trading narrows into Samsung Electronics and SK Hynix and holding periods shorten.