South Korean investor flows are moving away from domestic risk assets as the local market slumps, regulators tighten access to single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix, and banks report a sharp slowdown in ETF sales. Over the past week, overseas equity ETFs drew net inflows of 1.03 trillion won versus 344.6 billion won for domestic equity ETFs, according to ETF CHECK, extending an early-August rotation in which domestic asset ETFs saw outflows while overseas products attracted fresh money. The shift has coincided with a steep correction in South Korean equities. The KOSPI has fallen by about a third since June, while a separate report said it dropped 22.2% in July and briefly touched the 6,000 level. Samsung Electronics and SK Hynix accounted for 76% of the broader value loss cited in the earlier report. Since mid-2025, retail investors had poured more than $19 billion into leveraged single-stock ETFs linked to the memory-chip makers before the AI-driven rally reversed, contributing to forced liquidations and lower margin balances. From July 31, regulators tripled the minimum deposit requirement for the targeted products to 30 million won, froze new listings and banned advertisements. Trading in the affected ETFs then fell sharply, while investors redirected money into overseas equity ETFs, U.S.-listed leveraged funds, domestic index-based alternatives and safer bank time deposits. Separately, South Korea's four largest banks said July ETF sales distributed through their branches fell 83.1% to 1.92 trillion won, while their combined time-deposit balances rose to 813.81 trillion won as some lenders offered rates as high as 3.85%. Reuters also reported that South Korean retail investors bought $4.6 billion of U.S. stocks in July, five times June's pace, suggesting tax measures intended to favor domestic assets have so far failed to reverse demand for foreign exposure.