South Korea’s small-cap stocks are regaining investor interest after lagging larger peers for much of the year, as restrictions on leveraged exchanged-traded funds tracking heavyweight chipmakers shift money toward Kosdaq names.
The Kosdaq index jumped as much as 6.8% on Monday, taking gains from its July 30 trough to more than 30%. The Korea Exchange briefly halted program buying for the gauge as Kosdaq futures surged, the third such intervention this month.
A rotation from leveraged ETFs tied to Samsung Electronics Co. and SK Hynix Inc. has gathered pace after authorities imposed additional measures to curb retail access to such products, helping drive interest toward smaller stocks. The Kosdaq gauge is on track to outperform the benchmark Kospi Index this month by more than 20 percentage points.
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“We are seeing more money flow to Kosdaq, particularly today,” said Park Wooyeol, a global ETF analyst at Shinhan Securities. “Volatility-loving retail investors who have moved to the single-stock leveraged ETFs are expected to make a comeback to the Kosdaq.”
A historic selloff spurred by global artificial intelligence jitters sent the benchmark index plunging nearly 40% from its June peak to a late-July low, triggering forced liquidations that helped unwind margin loans. Trading in the single-stock leveraged ETFs tied to chipmakers also plummeted after new regulatory curbs requiring a higher cash deposit kicked in.
The Kosdaq surged 11% last week while the Kospi slipped 5.1%, marking the small-cap gauge’s best relative performance against the benchmark since the dot-com era in 2000.
This article was generated from an automated news agency feed without modifications to text.
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