[Digital Today reporter Sangyeop Oh] The launch of single-stock leveraged exchange-traded funds (ETFs) is entering its final countdown. Concerns are also growing that demand could become even more concentrated in large semiconductor shares.

The financial investment industry said on Tuesday that single-stock leveraged ETFs are expected to list on the domestic market on May 22. Until now, South Korea's ETF market has mainly consisted of index, sector and themed products, but products that track an individual stock's return at twice the rate will also be allowed. Inverse-structure products could also be launched.

The underlying asset is limited to stocks that account for at least 10 percent of total market capitalisation and at least 5 percent of trading volume. Currently, only Samsung Electronics and SK Hynix meet the criteria.

With the two stocks already accounting for a large share of the KOSPI, fund inflows after the new products are introduced are also likely to focus on large semiconductor shares.

Recently, the combined market capitalisation of South Korea's stock markets, including the KOSPI and KOSDAQ, has exceeded 6,100 trillion won. KOSPI market capitalisation was tallied at 5,421.6 trillion won and KOSDAQ at 679.5 trillion won.

Along with the stock market's upward trend, the ETF market is also growing rapidly. Domestic ETF market capitalisation has expanded to about 427.3 trillion won, up 18.4 percent so far this month.

Inflows are also continuing into Korea-related ETFs listed overseas. While funds are flowing into Korea ETFs listed in New York and Europe, new money is also moving into the iShares MSCI Korea ETF (EWY) listed in the United States and the Roundhill Memory ETF (DRAM) listed in Europe.

But the nature of leveraged products also increases investment risk. Leveraged ETFs are structured to track twice the underlying asset's daily return. Returns can grow in rising markets, but losses also double in falling markets.

Even if a stock price falls and then recovers to its original level, losses can remain in leveraged products. The more volatile the stock, the bigger the divergence from long-term holding can become.

The recent rise in the trading share of leveraged and inverse ETFs is also drawing attention.

The Korea Exchange said the share of leveraged and so-called double-inverse ETFs in total ETF trading value rose to 25.1 percent in January, 27.2 percent in February and 29.0 percent in March.

That is higher than in the same period last year. In particular, retail investors' share of leveraged ETF investment is higher than foreigners', raising concerns that short-term trading funds could increase market volatility.

Experts see single-stock leveraged ETFs as widening investor choice while also potentially intensifying concentration in specific stocks.

Yeom Dong-chan (염동찬), an analyst at Korea Investment & Securities, said, "If single-stock leveraged ETFs are listed, demand to buy single-stock futures will increase." He added, "SK Hynix is somewhat more advantageous than Samsung Electronics, which is close to a 25 percent weight. Increased futures demand is more positive for SK Hynix."