Retail Investors Adjust Overseas Portfolios After South Korea Tightens Single-Stock Leverage Thresholds, Shift to Buying Underlying US Stocks
TechFlow News, August 5: According to Korean media Daum, after Korean financial regulators raised the investment threshold for single-stock leveraged products, Korean retail investors began adjusting their overseas investment portfolios, reducing positions in high-leverage products and shifting to directly buying underlying US stocks. Data shows that since the minimum cash margin for single-stock leveraged products was raised to 30 million Korean won on August 1, significant capital outflow occurred in the Tesla 2x leveraged product TSLL. Korean investors still net bought about $14.58 million worth of TSLL on the 3rd, but on the 4th, the buy amount plummeted to $1.56 million, while the sell amount rose to $8.68 million, turning into a net sell of $7.11 million for the day. In contrast, enthusiasm for buying Tesla underlying stocks significantly increased. From the 3rd to the 4th, Korean investors cumulatively net bought about $42.3 million worth of Tesla stock, exceeding 5 times the net buy scale of TSLL during the same period.
A similar trend also appeared in individual semiconductor stocks. Korean investors sold leveraged products of Micron and SanDisk, shifting to purchasing underlying stocks. Among them, the Micron 2x leveraged product turned from a net buy of $10.81 million on the 3rd to a net sell of $15.98 million on the 4th; two SanDisk 2x leveraged products also turned from a net buy of $17.74 million to a net sell of $33.74 million. During the same period, Micron and SanDisk underlying stocks received net inflows of approximately $148 million and $145 million respectively.
Currently, leveraged ETFs such as SOXL, KORU that track multi-stock indices have not been affected by this restriction. Regulators believe that since their investment targets are diversified indices, the degree of risk diversification is higher than that of single-stock leveraged products.
