Now Reading: Rotation from leveraged ETFs drives South Korean small caps up 30%
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Rotation from leveraged ETFs drives South Korean small caps up 30%
Rotation from leveraged ETFs drives South Korean small caps up 30%
The KOSDAQ index jumped 6.8% on Monday, extending gains since July 30 to over 30%, as restrictions on leveraged ETFs tracking Samsung Electronics and SK Hynix shift money into small-cap stocks. The…
The Story in Brief
The KOSDAQ index jumped 6.8% on Monday, extending gains since July 30 to over 30%, as restrictions on leveraged ETFs tracking Samsung Electronics and SK Hynix shift money into small-cap stocks. The Korea Exchange briefly halted programme buying for the gauge after futures surged, the third such intervention this month.
A rotation from single-stock leveraged ETFs has gathered pace after authorities imposed higher cash deposit requirements. The KOSDAQ is on track to outperform the benchmark KOSPI by more than 20 percentage points in August. The small-cap gauge surged 11% last week while the KOSPI slipped 5.1%, marking its best relative performance since 2000.
The Indian Opinion
The KOSDAQ rally is being framed as a healthy rotation, but it still relies on the same volatility-loving retail traders who amplified the earlier crash. Leveraged products are only restricted, not banned, and the KOSPI remains dangerously concentrated in two chipmakers. Will the new curbs actually curb speculation, or will retail investors simply shift their leveraged bets to smaller stocks?
Sources (2): livemint.com, livemint.com (2)
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
