The Gate Only Worked on People Still Outside
Raise the price of entry to a crowded room, and watch who rushes in before it takes effect.
That's roughly what happened in Korea. Single-stock 2x products on Samsung and SK hynix launched May 27, when officials hoped to deepen the domestic market and keep capital onshore. Retail accounts at ten brokerages lost 6.313 trillion won on them through August 14, per regulator data released October 21. Of that, 2.32 trillion was realized and 3.99 trillion was still on the books.
That 63% unrealized share is the number I'd stare at, because it describes people still holding. On July 24, a week before the minimum deposit tripled to 30 million won, retail investors bought a net 453.8 billion won of these products in one day. Most were trading near half their listing-day price. Deposits, education and simulated trading screen who walks in. They do nothing for those already inside, and announcing them may have pulled more people in.
The limits matter. The data stops at August 14. Samsung has since fallen about 15% and SK hynix about 23% since September, per AJP, so the real figure is probably worse. I also can't see losses by product. These products target twice the daily move, and I suspect holding them over weeks behaves differently from trading them. That is my inference, not something this data proves.
My reading: the lesson isn't that leverage is dangerous. Entry gates and holding risk are different problems, and I'm not sure rules at the door can solve the second one.
$ARIA $AKE $FOREST
#EarningsSeason
#KoreanRetailLost6.3TrillionWonOnLeveragedETPs
Raise the price of entry to a crowded room, and watch who rushes in before it takes effect.
That's roughly what happened in Korea. Single-stock 2x products on Samsung and SK hynix launched May 27, when officials hoped to deepen the domestic market and keep capital onshore. Retail accounts at ten brokerages lost 6.313 trillion won on them through August 14, per regulator data released October 21. Of that, 2.32 trillion was realized and 3.99 trillion was still on the books.
That 63% unrealized share is the number I'd stare at, because it describes people still holding. On July 24, a week before the minimum deposit tripled to 30 million won, retail investors bought a net 453.8 billion won of these products in one day. Most were trading near half their listing-day price. Deposits, education and simulated trading screen who walks in. They do nothing for those already inside, and announcing them may have pulled more people in.
The limits matter. The data stops at August 14. Samsung has since fallen about 15% and SK hynix about 23% since September, per AJP, so the real figure is probably worse. I also can't see losses by product. These products target twice the daily move, and I suspect holding them over weeks behaves differently from trading them. That is my inference, not something this data proves.
My reading: the lesson isn't that leverage is dangerous. Entry gates and holding risk are different problems, and I'm not sure rules at the door can solve the second one.
$ARIA $AKE $FOREST
#EarningsSeason
#KoreanRetailLost6.3TrillionWonOnLeveragedETPs