Since Lee Jae-myung's inauguration as president, the domestic stock market has continued to rise, and significant investments have flooded into the KOSPI 3x leverage exchange-traded fund (ETF) listed on the U.S. stock market. With the launch of the new government, the 'honeymoon rally' was anticipated, leading investors seeking high returns to heavily purchase leverage products in the U.S. stock market.
According to the Korea Securities Depository on the 10th, domestic investors net purchased $8.345376 million (about 11.3 billion won) of the 'Direxion Daily MSCI South Korea Bull 3x (KORU)' listed on the U.S. stock market from the 3rd to the 5th of this month (settlement date basis from the 5th to the 9th). During this period, KORU surged 18% from $53 to $62.54 in just three trading days. Meanwhile, the KOSPI index rose by 4.20% during the same period.
For KORU, which is listed in the U.S., it tracks the KOSPI index's movement at a higher ratio (3x) than domestic leverage products. This has attracted a buying momentum from investors looking for greater revenue from KORU compared to domestic leverage products.
The 'KODEX Leverage' and 'TIGER Leverage' listed on the domestic stock market showed an increase in the 9% range. These ETFs track the KOSPI index fluctuation rate at twice the level. During this period, investors net sold both ETFs totaling 207.3 billion won, suggesting they quickly realized their profits given the rapid surge in the KOSPI index.
The net purchase amount for KORU was significantly less than the sale amount of domestic stock market leverage products during the same period. Given that it is a high-risk product and overseas ETFs are subject to capital gains tax, investments likely came mostly from small-scale investors.
Unlike domestic stock ETFs, overseas ETFs, including leverage products, are subject to capital gains tax. A 22% tax is applied to the remaining trading gains after excluding the basic deduction of up to 2.5 million won per year. Therefore, small-scale investors who earn trading gains of less than 2.5 million won do not need to pay taxes, making U.S. leverage ETFs advantageous in terms of taxation.
Typically, many investors trade leverage or inverse ETFs for short-term investments. Although they are products invested in the domestic stock market, they are listed in the U.S., requiring them to be traded in dollars after currency exchange. This also introduces risks related to exchange rate volatility between the dollar and the won.
However, due to the high-risk nature of U.S. leverage ETFs, the potential for losses can increase sharply depending on index movements, necessitating caution when investing. A financial investment industry official noted, "While 3x leverage ETFs can yield high revenue, as market volatility increases, revenue rates fall rapidly," adding, "The potential for losses to snowball means that investors capable of quick responses should approach with care."