Strong Momentum for Leveraged ETFs Amid Stock Market Rally

[Asia Economy Reporter Song Hwajeong] As the KOSPI continues its upward trend, nearing an all-time high, leveraged exchange-traded funds (ETFs) are also showing strong performance.

As of 9:35 a.m. on the 23rd, the KOSPI recorded 2,584.20, up 1.20% (30.70 points) from the previous day. This marks the fourth consecutive day of gains. Since the beginning of this month until the previous day, the KOSPI has risen by 12.63%.

With the stock market maintaining its strength, leveraged ETFs that bet on rising prices are also performing well. Among the top ETF returns this month, all from 1st to 14th place are leveraged ETFs. Benefiting from the growth of the electric vehicle market and expectations of improved earnings and economic conditions, TIGER 200 Energy Chemical Leverage has risen 37.46% this month, recording the highest return. Recently, as the European stock market continued its vaccine rally, TIGER Euro Stoxx Leverage (Synthetic H) rose 37.31%, and with the recent strength in semiconductor stocks including Samsung Electronics, TIGER 200 IT Leverage followed with a 28.51% increase. Other leveraged ETFs rounding out the top 10 returns include ARIRANG 200 Futures Leverage (27.53%), HANARO 200 Futures Leverage (27.47%), TIGER 200 Futures Leverage (27.34%), KBSTAR 200 Futures Leverage (27.30%), KOSEF 200 Futures Leverage (27.22%), KINDEX Leverage (27.08%), and KODEX Leverage (26.73%).

As further gains in the KOSPI are anticipated, the strong performance of leveraged ETFs is also expected to continue. Lee Kyungmin, a researcher at Daishin Securities, stated, "The upward trend that began with the easing of uncertainty around the U.S. presidential election is continuing due to expectations for early commercialization of vaccines and treatments, as well as large-scale foreign buying driven by the strengthening of the Korean won." He added, "With the price-to-book ratio (PBR) based on confirmed earnings surpassing and settling above the 1x level at 2,440, normalization of KOSPI valuation and attempts for further gains are expected."

There are forecasts that the KOSPI will break its all-time high by the end of the year or early next year. Kim Jungwon, a researcher at Hyundai Motor Securities, said, "After the past financial crisis, the KOSPI surpassed its previous historical high (2,068 points) within 38 months due to liquidity effects, but during the liquidity phase caused by the novel coronavirus disease (COVID-19), the period to break the high will be shorter." He predicted, "The current historical high of the KOSPI is 2,598.2 points (January 29, 2018), and by around the end of this year or early next year, about three years later, it will surpass the historical high and rise to 2,650 points."

This content was produced with the assistance of AI translation services.