South Korean retail investors lose 6.3 trillion won on single-stock leveraged products
In short
Individual investors in South Korea lost 6.313 trillion won on single-stock leveraged exchange-traded products between their May 27 launch and Aug 14, according to Financial Supervisory Service data released by lawmakers on Oct 21. Investors in their 40s lost the most in total, while investors aged 70 and over lost the most per account, about 29.94 million won.
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Individual investors who put money into single-stock leveraged exchange-traded products lost 6.313 trillion won from the products' May 27 launch to Aug 14, according to Financial Supervisory Service data reported on Oct 21. Of that, 2.3242 trillion won was realised through trading and 3.9888 trillion won was valuation loss on products still held. The data covers ten comprehensive financial investment firms, and 546,000 accounts traded the products at least once in the period. [ 1 , 3 , 4 , 5 , 6 , 7 , 10 ]
Investors in their 40s lost the most in total, 2.053 trillion won across 165,200 accounts, followed by those in their 50s with 1.8655 trillion won across 158,000 accounts and those in their 30s with 1.0912 trillion won across 117,300 accounts. Chosun Ilbo, Kyunghyang Shinmun and Hankook Ilbo said losses in the 40s and 50s together came to 3.9185 trillion won, or 62.1% of the total. Per account, investors aged 70 and over fared worst, losing 293.4 billion won across 9,800 accounts, an average of about 29.94 million won, or 2.6 times the 11.56 million won average across all accounts. Investors in their 60s lost 805.9 billion won across 61,000 accounts, about 13.21 million won each. [ 1 , 3 , 4 , 9 , 10 , 12 ]
Realised losses rose from 1.9638 trillion won at the end of July to 2.3242 trillion won on Aug 14, while valuation losses fell from 4.0395 trillion to 3.9888 trillion won, so total losses grew by 309.7 billion won. Yonhap and Asia Economy said the data cannot confirm why investors sold. Asia Economy and Dong-A Ilbo said the shift appears to reflect investors cutting losses or brokers forcing sales of credit and margin positions. By broker, Kiwoom Securities customers lost the most, 1.287 trillion won, followed by Mirae Asset Securities, Samsung Securities, NH Investment & Securities and Korea Investment & Securities. Outlets differ on the Mirae Asset figure. [ 1 , 3 , 4 , 5 , 7 , 10 , 12 ]
The figures cover only the period to Aug 14. Kyunghyang Shinmun reported that Samsung Electronics and SK hynix shares were about 20% below that level on Oct 21, so current valuation losses are likely larger. CBS NoCut News said accounts held by those under 20 lost 8.2 billion won. [ 3 , 9 , 13 ]
Lawmakers reacted. Shin Dong-wook of the People Power Party called the products "virtually a financial fraud against the public by the Lee Jae-myung government", according to Chosun Ilbo. Park Jun-tae of the same party called for a parliamentary investigation and a special counsel, and Kim Hyung-yeon (김형연) of the Rebuilding Korea Party (조국혁신당) urged a review of how the products were sold and advertised, Hankook Ilbo reported. Maeil Business reported that Financial Supervisory Service Governor Lee Chan-jin told a National Assembly audit on Oct 19 that parts of the review were done quickly to meet the schedule, and that the union of the regulator issued a statement on Oct 21 blaming a supervisory system subordinate to the Financial Services Commission. [ 3 , 4 , 10 ]
Maeil Business reported that authorities raised the minimum deposit for retail investors from 10 million to 30 million won on July 31 and made mock trading mandatory from Aug 19. [ 4 ]
Why it matters
The figures prompted calls from opposition lawmakers for a parliamentary investigation and a special counsel, and fed debate over how the products were approved and sold. The data covers only the period to Aug 14, so outlets say the current loss is likely larger.
Key facts
- Individual investors lost a total of 6.313 trillion won on single-stock ETPs (ETFs and ETNs) from the May 27 launch to Aug 14, according to Financial Supervisory Service data. [ 1 , 3 , 4 , 5 , 6 , 7 , 10 , 12 ]
- Of the total, 2.3242 trillion won was realised through trading and 3.9888 trillion won was valuation loss on products still held. [ 1 , 3 , 4 , 5 , 6 , 7 , 10 , 12 ]
- Investors in their 40s lost the most in total, 2.053 trillion won across 165,200 accounts, followed by those in their 50s (1.8655 trillion won, 158,000 accounts) and 30s (1.0912 trillion won, 117,300 accounts). [ 1 , 3 , 4 , 6 , 7 , 12 ]
- Investors aged 70 and over lost about 29.94 million won per account across 9,800 accounts, 2.6 times the 11.56 million won average across 546,000 accounts. [ 1 , 4 , 5 , 6 , 9 , 10 , 12 ]
- Losses by those in their 40s and 50s totalled 3.9185 trillion won, or 62.1% of the total. [ 3 , 9 , 10 ]
- Realised losses rose from 1.9638 trillion won at the end of July to 2.3242 trillion won on Aug 14, while valuation losses fell from 4.0395 trillion to 3.9888 trillion won. [ 1 , 4 , 5 , 6 , 9 , 12 ]
- Kiwoom Securities customers recorded the largest loss by broker, 1.287 trillion won. [ 3 , 7 , 10 , 12 ]
Confirmed by several sources
- The Financial Supervisory Service data, submitted to lawmakers on the National Assembly's Political Affairs Committee, put individual investors' total loss on single-stock ETPs at 6.313 trillion won from May 27 to Aug 14. [ 1 , 3 , 4 , 5 , 6 , 7 , 10 , 12 ]
- The loss comprises 2.3242 trillion won in realised trading losses and 3.9888 trillion won in valuation losses. [ 1 , 3 , 4 , 5 , 6 , 7 , 10 , 12 ]
- Per-account losses were highest among investors aged 70 and over, at about 29.94 million won, 2.6 times the all-account average of about 11.56 million won. [ 1 , 4 , 5 , 6 , 9 , 10 , 12 ]
- The figures cover only the period to Aug 14 and do not include later price moves. [ 3 , 4 , 9 , 13 ]
- The data was compiled from ten comprehensive financial investment firms, and 546,000 accounts traded the products at least once in the period. [ 1 , 3 , 5 , 7 , 10 ]
Still unclear
- Which lawmaker's office obtained the data. Outlets name Park Sung-hoon (docs 1, 4, 5, 6, 15), Shin Dong-wook (docs 3, 7, 12, 13), or both Park Sung-hoon and Park Jun-tae (docs 9, 17); doc 10 says the data went to each lawmaker's office on the committee.
- Why realised losses rose in August. Docs 1 and 6 say the data alone cannot confirm the reason for selling; docs 5 and 12 say it appears to reflect investors cutting losses or brokers forcing sales of credit and margin positions, and docs 5 and 6 say the data cannot confirm whether forced sales occurred.
- Mirae Asset Securities customers' loss. Docs 3 and 7 give 1.2576 trillion won; doc 10 gives 1.576 trillion won.
- The current size of the losses. Doc 9 says Samsung Electronics and SK hynix shares were about 20% below their Aug 14 level on Oct 21, so the loss is likely larger; doc 13 says the same without a figure.
- The number of accounts held by investors in their 60s. Doc 13 lists 6,100 accounts; docs 1, 4, 5, 6, 9 and 10 give 61,000.
What local media are saying
Timeline, local time
- Yonhap and Newsis publish reports on the 6.3 trillion won loss. [ 1 , 2 ]
- Chosun Ilbo reports the figures with the breakdown by age and broker. [ 3 ]
- Maeil Business and Asia Economy publish detailed reports; Maeil adds the Financial Supervisory Service union's statement. [ 4 , 5 ]
- Hankook Ilbo reports lawmakers' calls for an inquiry. [ 10 ]
- CBS NoCut News reports that accounts held by minors lost 8.2 billion won. [ 13 ]