Korean Retail Investors Shift $300M+ from Leveraged ETFs to Direct US Stocks

Following a 30M KRW margin hike, Korean retail investors sharply reduced single-stock leveraged ETF holdings, pivoting billions into direct Tesla and semiconductor equities.

Woofun AI data shows that South Korean retail investors have significantly altered their overseas portfolio allocations following the August 1 implementation of a 30 million KRW cash margin requirement for single-stock leveraged products. On-chain transaction data from the Korea Securities Depository reveals a stark reversal in capital flows for Tesla-related instruments. While net purchases of the 2x leveraged product TSLL stood at approximately $14.58 million on August 3, they plummeted to a net sell-off of $7.11 million on August 4. Conversely, direct investment in Tesla’s underlying stock surged, with Korean investors recording net purchases of roughly $42.3 million over the same two-day period, exceeding leveraged product activity by more than fivefold.

A parallel reallocation trend is evident in the semiconductor sector, specifically regarding Micron and SanDisk. Net positions in 2x leveraged products tied to these firms shifted from purchases of $10.81 million and $17.74 million on August 3 to net sales of $15.98 million and $33.74 million on August 4. During this interval, underlying shares attracted substantial inflows, with Micron and SanDisk seeing net purchases of approximately $148 million and $145 million, respectively. Regulators instituted the higher cash-only margin threshold to mitigate structural risks associated with daily return resets and capital concentration, explicitly excluding diversified multi-stock index leveraged ETFs like SOXL and KORU from these restrictions.