US Leveraged ETFs Keep Luring Korean Buyers as Tech Stocks Slump
(Bloomberg) -- South Korean investors loaded up on US leveraged exchange-traded funds this week, continuing to plow into a popular trade amid a rout that has plunged the market into a correction.
Retail investors from South Korea put a net $519 million into three US leveraged ETFs between March 10 and 13, according to Bloomberg calculations from Korean depository data. They also invested $371 million directly into the shares of Tesla Inc., which have fluctuated wildly this week.
The bets are just the latest sign that South Korea’s famously risk-hungry investor base is keeping its faith in the US stock market, even as worries about President Donald Trump’s disruptive trade policies weigh on sentiment.
The Direxion Daily Semiconductors Bull 3x Shares ETF (ticker SOXL) saw $232 million of inflows from South Korea this week while an ETF seeking two times returns on Tesla’s daily move got $181 million of demand. The ProShares UltraPro QQQ (TQQQ) saw an inflow of $106 million.
Koreans have become major investors in leveraged ETFs that offer exposure to tech stocks, raising concerns among local regulators. Leveraged ETFs amplify the returns and the losses investors can get by directly buying stocks.
Retail investors in the US have also continued to buy this week, suggesting a split between Wall Street and Main Street on the likely direction of stocks.