In the past three trading days, as the U.S. and domestic stock markets declined significantly, inverse investors engaged in large-scale profit realization. Individual investors sold inverse exchange-traded funds (ETFs) that bet on market declines, purchasing leverage products en masse, expecting a rebound after the drop.
According to the Korea Exchange on the 8th, all of the top 1 to 24 domestic ETF gains from the 3rd to 7th of this month were taken by inverse and leveraged (which tracks double the daily decline) products that bet on declines in underlying assets.
The RISE U.S. Semiconductor Inverse (Synthetic H) ETF from KB Asset Management rose the most at 24.21%, followed by the ACE U.S. Big Tech TOP 7 Plus Inverse (Synthetic) at 18.29% and the SOL U.S. Tech TOP 10 Inverse (Synthetic) at 17.41%. Other products such as the KOSPI 200 Inverse, Oil Futures Inverse, NASDAQ 100 Inverse, and Japan's TOPIX Inverse ETF followed.
The U.S. and domestic stock markets plummeted in the past three trading days due to the mutual tariff implementation by U.S. President Donald Trump. The NASDAQ and Standard & Poor's (S&P) indices fell by 11.4% and 10.7%, respectively, while the KOSPI and KOSDAQ indices dropped by 7.1% and 4.9%, respectively.
During this period, individual investors net sold 24 ETFs worth a total of 266.1 billion won. Of this, the net selling amount for 11 ETFs betting on declines in the KOSPI 200 reached 253.7 billion won (about 95%). As the prices of these ETFs rose between 8% and 20% during this period, those who invested in the short term are estimated to have made considerable profits.
Investors sold inverse ETF products and shifted to leverage products in anticipation of a rebound. During the same period, the top two net purchases by individuals were the KODEX Leverage and the KODEX KOSDAQ 150 Leverage ETFs, with net purchases of 478.7 billion won and 197.3 billion won, respectively. Other products such as KODEX 200 (144.6 billion won) and TIGER U.S. S&P 500 (107.7 billion won), which bets on U.S. stock market rises, and KODEX U.S. NASDAQ 100 (62.3 billion won) were also bought.
In the securities industry, it was anticipated that the volatility market would continue due to the U.S.'s stringent tariff policies causing sharp index fluctuations. Lim Hye-yun, a researcher at Hanwha Investment & Securities, noted that "the tariffs from Trump are stronger than expected, and the tariff burden could persist for at least this quarter, or as long as until the end of the year."
While it is possible to seek short-term profits by investing in leverage and inverse products, one must be aware that losses can increase if the index movements differ. Park Hyun-jung, a researcher at DAISHIN SECURITIES, stated that "the imposition of tariffs has led to an expansion of volatility in the global stock market," advising that conservative strategies such as low volatility, value, and high dividend are advantageous, and there is a need to pay attention to income-focused ETFs that concentrate on cash flow.