BOK Flags Leveraged ETFs as Samsung and SK Hynix Drive 99% of KOSPI Rally
The Bank of Korea has sharpened its warning on leveraged equity products after a year in which semiconductor concentration turned position changes in Samsung Electronics and SK Hynix into index-level shocks.
In its Sept. 10 monetary and credit policy report, the central bank said rapid growth in leveraged ETFs amplified stock-price volatility from a supply-and-demand perspective. It also identified a second channel outside Korea: as overseas leveraged products linked to Korean equities expanded, hedging generated additional trading in domestic spot and futures markets.
The concentration data show why that matters. When the KOSPI rose from about 8,000 to 9,000, Samsung Electronics contributed 44.7% of the gain and SK Hynix 54.3%, for a combined 99%. During the subsequent decline from about 9,100 to 5,500, their contribution to the fall was 29.8% and 39.6% respectively, or 69.3% combined.
Those percentages do not say leverage caused the semiconductor move. The BOK itself says expectations for the memory-chip industry were the primary influence on stock-price volatility. They show why leverage can magnify a fundamental shock once it arrives: the index is heavily exposed to the same stocks that sit underneath popular leveraged products.
A daily-reset leveraged ETF must rebalance exposure as its underlying asset moves. Swap counterparties and other intermediaries hedge. Retail margin borrowing adds a separate forced-selling channel when prices fall and collateral deteriorates. The BOK notes that debt-financed retail positions expanded to a record before being liquidated, reinforcing moves in both directions.
That creates a loop in which semiconductor fundamentals set the initial price direction, concentration transmits it to the KOSPI, and leveraged products can induce additional spot, futures and derivative trades. No autonomous AI trading system is required to explain the mechanism.
The policy implication is also narrower than a general attack on ETFs. In June, the BOK had said the market impact of single-stock leveraged ETFs appeared limited given the size and trading share of underlying assets. The September report is a more concerned assessment after the volatility episode, and the central bank now calls for stronger short-term monitoring of leveraged ETFs and stock investment financed by borrowing.
The portfolio implication is concentration risk with a mechanical amplifier. Exposure to the KOSPI carries sensitivity to Samsung and SK Hynix, while leveraged products referencing those names can force additional hedging when volatility rises. The 99% and 69.3% contribution figures show how quickly a semiconductor fundamental shock can become a market-structure shock.
Sources
Bank of Korea - September 2026 Monetary Policy Report · SBS - BOK leveraged-ETF warning and concentration data · Wall Street Journal - Korean leveraged equity trades