South Korean retail investors are returning to complex equity-linked securities offering annualised coupons as high as 50%, showing that last month’s historic stock selloff has redirected rather than reduced their appetite for risk, Bloomberg reported. Sales of equity-linked securities, or ELS products, reached 3.5 trillion won ($2.5 billion) in July, the highest level since April 2023, according to the Korea Financial Investment Association. Demand was led by notes tied to Samsung Electronics Co. (KS:005930) and SK Hynix Inc. (KS:000660), two of South Korea’s largest listed companies. ELS products pay coupons when their underlying stocks or indexes remain within predetermined ranges. Investors can suffer substantial losses if those assets fall through specified barriers, known as knock-in levels. Meritz Securities recently issued a note linked to Samsung and SK Hynix offering an annualised yield of 43.4%. Investors may lose principal if either stock drops 70% during the product’s term and remains far below its starting level at maturity. Kiwoom Securities Co. (KS:039490) offered another product linked to SK Hynix and LG Electronics Inc. (KS:066570), with coupons reaching 50%. Its disclosure warned that losses could range from 30% to the entire investment if payout conditions were not met. Interest in the products increased after the Kospi plunged 22% in July. Regulators had also moved to restrict single-stock leveraged exchange-traded funds, which were blamed for intensifying market swings. Samsung and SK Hynix shares have recovered during August but remain at least 22% below their June record highs. Starting next month, South Korea’s Financial Supervisory Service will tighten oversight of structured products. Brokerages will have to alert investors when notes approach knock-in levels and review offerings when market conditions sharply increase risks. South Korean investors previously suffered heavy losses on structured notes during the Brexit vote, the 2020 oil collapse and the 2021-2024 Chinese equity slump. ELS issuance could ease as market volatility declines, reducing the option premiums used to fund large coupons.