Employees hold a celebratory ceremony at the Korea Exchange (KRX) headquarters in Yeouido, Seoul, on Jan. 27, after the Kospi closed above 5,000 points and the Kosdaq surpassed the 1,000-point mark. (Yonhap)
SEOUL, Jan. 28 (Korea Bizwire) — South Korea’s retail investors are piling into exchange-traded funds tied to the Kosdaq market as the tech-heavy index pushes into what traders have dubbed the “1,000 era,” fueling sharp gains in leveraged products and reshaping short-term market flows.
According to data released Wednesday by Koscom’s ETF Check, the top five ETF performers over the past week were all leveraged funds designed to track the Kosdaq 150 index at multiples of its daily movement. Returns ranged from roughly 34 percent to more than 35 percent, reflecting the index’s recent surge.
The rally has been driven by growing expectations of government measures to revitalize the Kosdaq market, along with a shift in investor demand from the benchmark Kospi, which had already posted stronger gains earlier. As a result, retail investors — known locally as “ants” — have rapidly redirected their money toward smaller, growth-oriented stocks.
Data from Yonhap Infomax showed that in the two trading days following the Kosdaq’s move above the 1,000 mark on Jan. 26, individuals net bought more than 1 trillion won of Kosdaq-linked ETFs. The largest inflows went into the KODEX Kosdaq 150 ETF, excluding leveraged products, followed by its leveraged counterpart and similar funds offered by rival providers.
On Jan. 26 alone, retail investors poured nearly 600 billion won into the KODEX Kosdaq 150 ETF, marking the largest single-day net purchase by individuals in the history of South Korea’s ETF market. Heavy buying continued the following day as the index climbed more than 7 percent to close at 1,064.
The buying frenzy was so intense that online education platforms — which investors must complete before trading leveraged ETFs — were briefly overwhelmed by traffic, according to market officials.
As enthusiasm for Kosdaq-linked funds surged, retail investors moved in the opposite direction on Kospi-based products. Over the same period, individuals sold ETFs tracking the Kospi 200 index and increased positions in inverse funds betting on declines in large-cap shares.
Market analysts said the rapid rotation highlights speculative momentum rather than long-term reallocation, warning that leveraged ETFs can amplify both gains and losses in volatile markets.
Still, for now, the return of the Kosdaq above the psychologically significant 1,000-point level has rekindled a familiar pattern in South Korea’s equity markets — one in which retail investors chase fast-moving themes, even as risks quietly build beneath the rally.
Ashley Song (ashley@koreabizwire.com)
