SKHX Slides Again as Korea Targets the Leveraged ETFs Fueling Its Own Crash

Still Bleeding After the Circuit Breakers

The June 23 session was the spike; this is the grind. The KOSPI fell as much as 9% and tripped market-wide circuit breakers twice in a single day, with SK Hynix and Samsung Electronics both closing down roughly 12% and Japan's Kioxia tumbling over 15% in sympathy. SKHX, which tracks one SK Hynix share converted from KRW to USD, took the full hit and is now sliding another 6.13% as the underlying keeps leaking lower into the next session.

This is what a forced unwind looks like once the panic spike is done: not a clean V-bottom, but stepwise selling as leveraged positions get marked down and liquidated in tranches. The broader AI selloff that dragged Wall Street is the backdrop, but Korea's move is its own animal — a domestic leverage problem amplifying a global risk-off, not the other way around.

The ETF Doom Loop

The mechanism is specific and worth understanding. Korea launched 16 single-stock leveraged ETFs on Samsung and SK Hynix in late May. They held about 4.5 trillion won at launch and swelled past 14 trillion won in under a month — roughly 92% retail-owned and now responsible for more than 30% of daily trading volume in both chipmakers.

That concentration is the whole story. A 2x daily-reset product has to buy more as the stock rises and sell more as it falls, mechanically, every day. When that machine becomes a third of the tape in the two largest names on the index, the ETFs stop tracking the stocks and start driving them. The dislocation already produced a leveraged fund that jumped 50% on a day the stock fell nearly 8%, then reversed 27% the next session — pricing that has nothing to do with SK Hynix's memory business and everything to do with thin liquidity in the closing auction.

Now the Regulator Is the Catalyst

The new wrinkle in this leg is policy. The Financial Supervisory Service governor publicly said he regrets approving the ETFs, estimating they generated $3–6.4 billion in trading commissions that "did little more than enrich securities firms at retail investors' expense." The FSS is now weighing stabilization steps: tighter trade monitoring, better credit-risk controls, stronger risk disclosures, and — the part that matters for price — possible restrictions on margin trading and securities lending tied to the funds.

Here is the trap. Curbing leverage on a product that is already 30% of daily volume doesn't calm the unwind; in the near term it accelerates it, because anything that forces those positions smaller is more selling. The signal to watch isn't SK Hynix's fundamentals — the stock is still up triple digits in 2026 and the AI-memory demand story is intact. It's whether the FSS announces hard caps and how violently the ETF complex has to delever to meet them. Until that resolves, SKHX trades the leverage, not the chips.