KOSPI volatility expands after the launch of single-stock leveraged products
KOSPI volatility expands, and the number of days with swings of more than 3% increases after the launch of single-stock leverage Take a look at the impact of Samsung Electronics and SK Hynix, along with concerns over individual investors’ losses
An analysis has found that KOSPI’s daily price range has widened since the launch of singlestock leveraged products. Citing data from NH Investment & Securities on the 9th, Chosun Ilbo reported that after the introduction of a 2x leveraged product based on Samsung Electronics and SK Hynix shares, the proportion of days when the KOSPI moved more than 3% up or down increased.
According to the article, there were 42 days this year when the KOSPI surged or fell by more than 3%, indicating greater volatility compared with the 96 trading days before the leveraged product was launched. The number of days with moves of more than 5% also rose from 2 last year to 25 this year.
The report explained that leveraged products can amplify losses when stock prices fall, and that because Samsung Electronics and SK Hynix, the underlying assets, account for a large share, volatility across the overall market could also expand. However, the article also raised concerns that, along with the analysis that the structure of such products can increase volatility, the burden of losses on individual investors could grow.