SK Hynix leveraged ETFs debut in U.S. amid $1B retail losses in Asia

The explosive growth of leveraged exchange-traded funds tied to SK Hynix has left retail investors in Hong Kong nursing steep losses, as wild swings in the South Korean chipmaker's shares turned leveraged bets into a punishing trap for everyday traders.

A Leveraged Juggernaut Turns Painful

The CSOP SK Hynix Daily (2x) Leveraged Product, listed in Hong Kong under ticker 7709, became the city's largest ETF in June after its assets under management surpassed $17 billion, overtaking the Tracker Fund of Hong Kong that tracks the Hang Seng Index. The fund, launched in October 2025 and designed to deliver twice SK Hynix's daily return, had returned nearly 900 percent year-to-date by late June, according to Bloomberg Intelligence analyst Rebecca Sin.straitstimes+1

But the same leverage that magnified gains has now amplified pain. On June 23, SK Hynix fell 12.47 percent in its worst single-day decline since the 2008 financial crisis, dragging the Kospi down nearly 10 percent and triggering a market-wide circuit breaker. Bloomberg Intelligence estimated that leveraged ETFs for Samsung Electronics and SK Hynix mechanically sold approximately $6 billion worth of shares during that session to rebalance their ratios. By early July, analysts estimated mark-to-market losses on single-stock leveraged ETFs tied to Samsung and SK Hynix at roughly 1 trillion won ($660 million), with nearly all such funds sinking below their listing price.etf+3

Retail Investors Bear the Brunt

Retail investors account for approximately 92 percent of holders in these leveraged products, according to reporting by Yahoo Finance. SK Hynix's daily average stock price fluctuation over the past month reached about 7 percent, according to South Korea's Maeil Business Newspaper, amplifying the compounding losses inherent in daily-reset leveraged funds. As of July 7, paper losses of approximately 1.54 trillion won (roughly $1 billion) had emerged in SK Hynix leveraged ETFs alone.mk+2

The situation drew a rare public expression of regret from South Korea's top financial regulator. Supervisory Governor Lee-jin said during a June 23 briefing that he wished he had "taken extreme measures to protest the launch" of the 16 leveraged ETFs focused on Samsung and SK Hynix that were introduced in late May.finance.yahoo

Risks Spread as Products Multiply

The frenzy shows no sign of slowing. ProShares launched its own 2x SK Hynix ETF for U.S. investors this week, with Bloomberg's Sin warning that "US investors may encounter the same tracking challenges" seen in Hong Kong's leveraged products. Assets in South Korea's leveraged ETFs have surged 800 percent since January to a record $45 billion, with leveraged exposure as a share of free-float market capitalization tripling to 2.9 percent. Bloomberg reported in July that the Hong Kong fund had grown so large it was beginning to move the very stock it was built to track.proshares+3