Story perspectives

Korea lifts ETF margin, chip leveraged ETF drops 70%

7/20/2026

Summary

South Korea Raises

South Korea raised the margin for single-stock ETFs from KRW30,000 to KRW300,000 on Thursday.
Since May 27, domestic investors have bought a net KRW14 trillion of these ETFs while foreigners added KRW2 trillion.
The KODEX SK Hynix leveraged ETF fell 70% from its June high and 50% since debut.
Margin calls forced traders in their 40s-50s to absorb losses while analysts say chip fundamentals stay sound but leveraged unwinding pressures South Korean tech stocks.

Summary

Korea Margin Crunch

In July, over 1.2 million accounts received margin calls, leading to about 360,000 liquidations and a rate above 10 %.
Margin loans amounted to 38.63 trillion won, or 2.6 % of GDP.
Investor debt reached 60 trillion won by the end of May.
Four stocks, including Samsung Electronics and SK Hynix, accounted for a large share of the 27.4 trillion won margin debt.
The market tumble caused over $253 million in leveraged cryptocurrency liquidations in a single session.

Summary

Lee Flags ETFs

President Lee Jae Myung’s approval rating fell to 52% in July, down from 67% in April.
A petition urging government action on leveraged ETFs has attracted more than 35,000 signatures.
Lawmakers across ruling and opposition parties warned the chip-linked leveraged ETFs turn the market into a “casino.”
Lee described the market as “quite unstable” and urged rapid corrective steps as the two ETFs now represent over 70% of trading value.

History

Historical Context

In December 1997 South Korea signed a $58.4 billion IMF agreement after the Hanbo scandal and a wave of chaebol bankruptcies pushed the won past 1,700 per dollar and corporate debt to roughly 40 % of GDP. The crisis led to tighter leverage rules, which now frame the surge in single-stock leveraged ETFs, margin calls on Samsung and SK Hynix, and Lee Jae-Myung’s regulatory push.

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South Korea Raises

South Korea raised the margin for single-stock ETFs from KRW30,000 to KRW300,000 on Thursday.
Since May 27, domestic investors have bought a net KRW14 trillion of these ETFs while foreigners added KRW2 trillion.
The KODEX SK Hynix leveraged ETF fell 70% from its June high and 50% since debut.
Margin calls forced traders in their 40s-50s to absorb losses while analysts say chip fundamentals stay sound but leveraged unwinding pressures South Korean tech stocks.

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