As the KOSPI falls for 7 straight sessions, trading in inverse exchange-traded funds (ETFs) that bet on index declines is increasing. Single-stock inverse products also gained on sharp falls in Samsung Electronics and SK Hynix, while leverage products that bet on share price gains fell about 20 percent in a day.

On Oct. 15, the securities investment industry said turnover in the KODEX 200 Futures Inverse 2X totalled about 1.25 trillion won. Turnover, which was 413.1 billion won on Oct. 8, rose to 994.1 billion won on Oct. 13 and surpassed 1 trillion won on the day.

Turnover in KODEX Inverse was also about 1.18 trillion won. Daily turnover in the two products alone reached 2.42 trillion won. KODEX 200 Futures Inverse 2X ended at 110 won, up 15.79 percent from the previous session, and KODEX Inverse closed at 1,242 won, up 8.09 percent.

The strength in inverse products coincided with a steep decline in the domestic stock market. The KOSPI closed at 5,554.22, down 454.59 points, or 7.57 percent, from the previous session. It has fallen for 7 straight sessions since Oct. 6, losing 1,449.52 points over the period.

Samsung Electronics closed at 210,000 won, down 9.48 percent, and SK Hynix ended at 1,262,000 won, down 11.06 percent. With both shares plunging, prices of inverse products that track twice the inverse of related futures' daily returns rose sharply.

SOL SK Hynix Futures Single Stock Inverse 2X closed at 10,795 won, up 21.36 percent, and PLUS Samsung Electronics Futures Single Stock Inverse 2X ended at 12,600 won, up 20.34 percent.

Gains over the past week were bigger. Compared with the Oct. 8 close, SOL SK Hynix Futures Single Stock Inverse 2X rose 65.69 percent from 6,515 won to 10,795 won. PLUS Samsung Electronics Futures Single Stock Inverse 2X also gained 49.29 percent over the same period, from 8,440 won to 12,600 won.

By contrast, 14 single-stock leverage products posted declines of 19 to 22 percent. KODEX SK Hynix Single Stock Leverage closed at 5,285 won, down 21.70 percent, and TIGER SK Hynix Single Stock Leverage ended at 4,470 won, down 22.13 percent.

The two products set new record lows for closing prices for 3 straight sessions since Oct. 13. Compared with their listing prices of 23,450 won and 19,985 won, respectively, they are at about one-fifth of those levels.

Samsung Electronics leverage products also slid to their lowest prices since listing. KODEX Samsung Electronics Single Stock Leverage closed at 7,595 won, down 19.63 percent, and TIGER Samsung Electronics Single Stock Leverage ended at 6,880 won, down 19.01 percent. Both products fell below their previous record lows for closing prices set on July 30.

On the day, the market capitalisation of 16 single-stock leverage and inverse products fell 807.8 billion won to 3.56 trillion won from 4.36 trillion won the previous day. Turnover rose 58.5 percent from the previous day to 803.7 billion won.

Trading flows differed by investor type. According to Koscom's ETF Check, institutions were net buyers of KODEX 200 Futures Inverse 2X worth 143.8 billion won and KODEX Inverse worth 95.0 billion won. Foreigners were also net buyers of the two products worth 27.0 billion won and 9.8 billion won, respectively.

Retail investors were net sellers over the same period, unloading 156.7 billion won of KODEX 200 Futures Inverse 2X and 105.2 billion won of KODEX Inverse. In single-stock inverse products, they also posted net selling of SOL SK Hynix Futures Single Stock Inverse 2X and PLUS Samsung Electronics Futures Single Stock Inverse 2X worth 21.3 billion won and 10.9 billion won, respectively.

Instead, retail investors were net buyers of KODEX Leverage worth 670.1 billion won. They also bought KODEX KOSDAQ 150 Leverage and KODEX SK Hynix Single Stock Leverage worth 251.9 billion won and 100.4 billion won, respectively.

Retail leverage buying continued on the day. Retail investors were net buyers of KODEX SK Hynix Single Stock Leverage worth 42.2 billion won and KODEX Samsung Electronics Single Stock Leverage worth 24.8 billion won. Foreigners were net sellers of the same products worth 18.4 billion won and 5.7 billion won, respectively.

Hur Jae-hwan (허재환), a researcher at Eugene Investment & Securities, analysed that during the sharp fall in the domestic stock market and semiconductors in July, the impact of excessive concentration in single-stock leverage ETFs and memory semiconductors was greater than fundamentals. He said that this time, worries about the financial market increased further as heightened interest rate burdens were compounded by credit risk.