Global markets are experiencing an unprecedented surge in leveraged and inverse semiconductor ETF trading. US assets in these funds have reached nearly $200 billion. Daily rebalancing flows hit a record $50 billion, significantly increasing market volatility.
In South Korea, leveraged ETFs tracking Samsung and SK Hynix saw 212 trillion won in June trading volume. These trades represented more than 25% of all ETF activity in the country.
The AI-driven semiconductor rally fuels this frenzy and causes extreme price swings. South Korea’s KOSPI index recorded intraday swings exceeding 750 points, surpassing the volatility of Bitcoin.
Daily rebalancing mechanics in these leveraged products exacerbate market downturns. While some investors achieve substantial returns, the inherent volatility also leads to significant losses.