Individual Investors Net Buy 140.3 Billion Won in a Month... KOSPI Surges While Double Inverse ETFs Hit Rock Bottom

Leveraged Inverse ETFs That Double Down on Index Declines
Sweeping the Top 1 to 5 Spots in Last Week’s ETF Losses
Prices Drop to 52-Week Lows
KOSPI Recovers from War Shock... Further Declines Expected for Leveraged Inverse ETFs

As the KOSPI rebounds from the shock of war and approaches its previous high, the prices of “geared inverse” (2x inverse) exchange-traded funds (ETFs) betting on a KOSPI decline have dropped to their lowest levels so far this year. Despite persistent geopolitical uncertainties stemming from the Middle East, expectations of continued upward momentum in the KOSPI—which has developed resilience—are leading to forecasts of further declines in the returns of geared inverse ETFs.

According to the Korea Exchange on April 21, geared inverse ETFs ranked lowest in ETF performance last week. KIWOOM 200 Futures Inverse 2X fell by 13.90%, recording the sharpest drop. TIGER 200 Futures Inverse 2X declined 12.07%, KODEX 200 Futures Inverse 2X fell 11.87%, PLUS 200 Futures Inverse 2X dropped 11.67%, and RISE 200 Futures Inverse 2X was down 11.66%, placing all top five decliners among the geared inverse ETFs. These products generate double the return when the index falls, but conversely, incur double the loss when the index rises.

Last week, the KOSPI rose by 5.68%, and the KOSPI 200 climbed 5.99%.

Although over the weekend the Strait of Hormuz was blocked again—amplifying Middle East-related geopolitical issues—on the previous trading day, the market continued its upward trend, edging closer to its previous peak. As a result, geared inverse ETFs successively marked new 52-week lows.

During the trading session, KIWOOM 200 Futures Inverse 2X hit a 52-week low of 184 won, KODEX 200 Futures Inverse 2X dropped to 188 won, TIGER 200 Futures Inverse 2X to 198 won, PLUS 200 Futures Inverse 2X to 390 won, and RISE 200 Futures Inverse 2X to 191 won, each renewing their respective 52-week lows.

As the KOSPI is expected to continue its upward trajectory, having recovered nearly all of its losses from the Iran war, further declines in these geared inverse ETFs appear inevitable.

Lee Sangyeon, a researcher at Shin Young Securities, commented, “Heightened geopolitical risk is no longer a new variable in the market, but rather an event that has been repeatedly priced in. Global stock markets have already been rebounding since April, and are shifting toward momentum and fundamentals-driven trading. Even if volatility increases going forward, the downside of the index is likely to remain solid. The Korean stock market is likely to attempt to break through its previous high, reflecting positive earnings momentum.”

Lee Kyungmin, a researcher at Daishin Securities, noted, “Currently, the KOSPI is reflecting improvements in business conditions and earnings of major industries and sectors that had been overshadowed by geopolitical risks. Following Samsung Electronics’ earnings surprise, the earnings outlook for the semiconductor sector has been upgraded, and the KOSPI’s forward price-to-earnings ratio (PER) is just 7.55 times—similar to the pandemic-era low of 7.52 times. Even normalization of valuations alone could sustain a march toward new all-time highs.”

With further declines in geared inverse ETFs expected, concerns are growing that investor losses will deepen. According to ETF Check, individual investors have net purchased 140.3 billion won worth of KODEX 200 Futures Inverse 2X over the past month.

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