Leveraged ETF Regulation-Induced Crash? Variables You Must Check Now

Summary

Park Byung-chang, CEO of MP Partners, dissects the sharp KOSPI/KOSDAQ crash, attributing it to leveraged ETF unwinding in Samsung Electronics and SK Hynix rather than AI semiconductor fundamentals. He outlines regulatory talks on leverage limits as a negative for demand, and recommends avoiding semis near-term while favoring financial holding companies as a stable, rate-sensitive play and monitoring power/electricity stocks for future entry.

• The crash was driven by forced selling of leveraged ETF positions in Samsung Electronics and SK Hynix, not AI demand collapse.
• Regulatory measures (turnover limits, investor qualifications) are being discussed and would reduce speculative demand, acting as a near-term headwind.
• Korean financial holding companies are hitting new highs, supported by interest rate hike expectations and a rotation out of semiconductors.
• Power/electricity stocks remain an important long-term theme but are overvalued and have corrected, warranting a watch for re-entry.
• Speaker is personally reducing semiconductor exposure and accumulating non-semiconductor positions, waiting for stabilization.
• Global chip markets outside Korea showed resilience, confirming the sell-off is a Korea-specific leverage event.
• Market will remain weak until forced selling abates; near-term avoidance of Samsung and SK Hynix is prudent.
• Key macro risk is a Federal Reserve shift toward rate hikes, which would be broadly destructive for Korean equities.