[Analysis] Volatility Storm Caused by Leverage ETF Craze: Why Are Samsung Electronics and SK Hynix Stock Prices Fluctuating?

As of July 14, 2026, the Korean stock market faces a strange paradox. Samsung Electronics and SK Hynix, the backbone of the national economy, are caught in a storm of volatility driven by leverage ETFs (Exchange Traded Funds). With these two semiconductor giants and their related derivatives accounting for 70% of the total trading volume, financial authorities warn that the 'tail wagging the dog' phenomenon is threatening the stability of the KOSPI.

According to a Bloomberg report on July 8, 2026, the concentration of trading in Samsung Electronics, SK Hynix, and related leverage ETFs has reached unprecedented levels. As enthusiastic demand from individual investors for leverage products poured in, the phenomenon of market liquidity being excessively skewed toward specific stocks intensified. This concentration harms the overall health of the market and carries the risk that negative news in a specific sector could lead to a collapse of the entire market.

I regret not being able to prevent the launch of leverage ETFs in May 2026. The market is currently in an abnormal situation where the tail, represented by leverage products, is wagging the body, which is Samsung Electronics and SK Hynix. — Lee Chan-jin, Governor of the Financial Supervisory Service

The structural mechanism of leverage ETFs is a key factor further amplifying this volatility. Leverage ETFs perform 'daily rebalancing,' adjusting their asset composition every day to maintain a target multiple. In this process, a pro-cyclical structure of 'buying high and selling low' is formed—buying more when prices rise and selling more when they fall—artificially increasing volatility by forcing trades in the same direction as market movements.

Quantifying Volatility: The Surge of VKOSPI

Market instability is also clearly evident in the figures. Korea's volatility index, VKOSPI, maintained an average level of 53.0 before the large-scale listing of leveraged ETFs, but has soared to 88.9 as of July 2026. This is an indicator showing that the perceived risk level among investors has risen sharply in a short period since leveraged products entered the market.

• VKOSPI Volatility Index: Increased from an average of 53.0 to 88.9
• Credit loan balance: Surged from 2.73 trillion KRW at the end of 2025 to 3.73 trillion KRW at the end of June 2026
• Average daily forced liquidation volume: Increased 8-fold from 7.1 billion KRW to approximately 56.8 billion KRW

The Financial Supervisory Service (FSS) is closely monitoring this situation. FSS Governor Lee Chan-jin recently formalized the negative impact of the spread of leveraged ETFs on the market through his remarks and hinted at the possibility of strengthening regulations on such products in the future. In particular, he expressed deep concern over the phenomenon where single-stock leveraged products distort the price formation process of underlying assets.

In fact, in June 2026, a bizarre phenomenon occurred where ETF prices moved in the opposite direction of the underlying stock prices. On June 8, while SK Hynix's stock price fell by 8%, a specific leveraged ETF surged by 50%, and the next day, when the stock price rose by 16%, the ETF fell by 27%. This price decoupling is cited as a typical risk case that occurs when a lack of liquidity is combined with excessive leveraged betting.

Debt-Based Investment Craze and Systemic Risk

The popularity of leveraged ETFs goes hand in hand with the increase in widespread credit transactions. The credit loan balance, which was 2.73 trillion KRW at the end of 2025, swelled to 3.73 trillion KRW by the end of June 2026. As 'debt-investing' (investing with borrowed money) becomes commonplace, the scale of forced liquidations due to margin calls during market downturns has also exploded eightfold from a daily average of 7.1 billion KRW to 56.8 billion KRW, exerting sequential downward pressure.

In the future, investors should closely monitor the regulatory movements of financial authorities and whether the market's self-purification mechanism works. While leveraged ETFs have the positive aspect of providing necessary liquidity to the market, the current induction of excessive volatility carries a high risk of spreading into systemic risk. It is an urgent time to prepare institutional safeguards to ensure that Samsung Electronics and SK Hynix do not degenerate into tools for speculative products.