Single-stock leveraged exchange-traded funds (ETFs) that track Samsung Electronics and SK Hynix shares at twice the move posted more than 10 trillion won in turnover from their first day of listing. The ETFs logged double-digit gains as the underlying large-cap chip stocks surged, but the number of gainers on the KOSPI was limited to 75, deepening a semiconductor-driven market.

According to the Korea Exchange on Tuesday, the KOSPI closed at 8,228.70, up 2.25 percent from the previous session. With Samsung Electronics and SK Hynix showing strength early in the session, the index briefly topped 8,400. A buy-side sidecar was triggered in the KOSPI market after a surge in KOSPI 200 futures.

The Kosdaq, meanwhile, ended down 3.36 percent at 1,133.13. Only 75 KOSPI stocks rose on the day, while 826 fell. On the Kosdaq, 192 issues gained and 1,507 declined.

Investor flows diverged by market. On the KOSPI, retail investors were net buyers of 406.6 billion won and institutions bought a net 188.0 billion won. Foreigners sold a net 461.2 billion won. On the Kosdaq, retail investors bought a net 642.5 billion won, while foreigners and institutions sold a net 67.1 billion won and 551.8 billion won, respectively.

The Samsung Electronics and SK Hynix single-stock leveraged ETFs listed on the day drew buying interest from the opening. KODEX SK Hynix Single Stock Leverage ended at 27,775 won, up 18.44 percent from its base price. Its turnover was 4.39 trillion won, the largest among related products. TIGER SK Hynix Single Stock Leverage rose 18.56 percent, with turnover of 2.07 trillion won.

Single-stock leveraged ETFs tied to Samsung Electronics also gained. KODEX Samsung Electronics Single Stock Leverage rose 5.52 percent and TIGER Samsung Electronics Single Stock Leverage climbed 5.53 percent. Total turnover in 16 Samsung Electronics and SK Hynix single-stock leveraged ETF products listed on the day topped 10 trillion won.

Some SK Hynix single-stock leveraged ETFs jumped as much as 60 percent early in the session. South Korea's daily price limit for domestic stocks is 30 percent, but under a two-times leverage structure, an ETF can rise or fall by as much as 60 percent.

SK Hynix stock futures surged early in the session, triggering a widening of the price limit. The move coincided with the activation of a buy-side sidecar, and was seen as affecting some liquidity providers (LPs) that were unable to supply quotes in time.

Sentiment toward semiconductor investment was also strong. Micron jumped 19.3 percent overnight in the U.S. stock market, and the Philadelphia Semiconductor Index rose 5.5 percent. UBS sharply raised its target price for Micron, boosting expectations for a re-rating of memory industry conditions on artificial intelligence (AI) demand, which also affected domestic chip stocks.

The market's internal spread, however, was limited. The index rose led by large-cap chip stocks, but key Kosdaq sectors such as secondary batteries, robots and semiconductor materials, components and equipment underperformed. Dependence on semiconductors increased as well.

According to Jin-hyeok Kang (강진혁), an analyst at Shinhan Securities, Samsung Electronics and SK Hynix accounted for about 35 percent of the KOSPI's market capitalisation at the end of last year, but the share surpassed 50 percent last week. As of Tuesday, the share was put at 53.0 percent. As the KOSPI has risen around 100 percent since the start of the year, large-cap chip stocks have led the index higher.

Jae-won Lee (이재원), an analyst at Yuanta Securities, said, "The launch of single-stock leverage ETFs for Samsung Electronics and SK Hynix created additional buying demand for the stocks and futures." He added, "With upward revisions to semiconductor earnings estimates continuing and debate over valuation re-rating persisting, it is a factor that could allow expectations for a compounding effect of share price gains."

Lee said the effect of flows spreading into the broader semiconductor sector held in existing semiconductor ETF baskets could be smaller than before. He meant that the more funds concentrate into single large-cap stocks, the relative sidelining of Kosdaq and small- and mid-cap semiconductor stocks could continue.

The possibility of increased short-term volatility is also a burden. Ji-young Han (한지영), an analyst at Kiwoom Securities, said, "As of the 21st, the combined number of new applicants for leveraged ETF education and those who have completed it exceeds about 200,000, so we can expect a positive effect of supplying new liquidity to the stock market." She added, "It is also time to consider that index volatility has risen as the KOSPI repeatedly set new highs and swung sharply."

Han said, "Given that the combined market capitalisation of Samsung Electronics and SK Hynix reaches 3,100 trillion won, the influence of single-stock leverage may not be large in the medium term." She added, "If amplified concentration in flows occurs right after the launch, volatility in the underlying assets could increase as it approaches the closing call auction period."