SK Hynix Leveraged ETF Investors Trapped at High Levels Struggle to Break Even: Average Losses Exceed 76%, Breaking Even Requires Nearly 326% Further Rise

According to Korean media Daum, although SK Hynix and Samsung Electronics have seen recent stock price rebounds, investors who bought near the highs at the end of June still face significant losses. Data from the Korea Exchange shows that for investors who bought at the high on June 25, SK Hynix's 7 leveraged ETFs saw declines ranging from -75.98% to -76.75%, with an average loss of 76.51%; Samsung Electronics' 7 single-stock leveraged ETFs had cumulative returns compared to that day ranging from -51.64% to -52.76%, with an average loss of 52.25%. If investors had invested 1 million KRW respectively at that time, the SK Hynix leveraged ETFs would now be worth only about 235,000 KRW, while the Samsung Electronics leveraged ETFs would be worth only about 478,000 KRW. Due to the non-linear return characteristics of leveraged ETFs, the difficulty of recovering losses is far greater than the decline itself. Data shows that Samsung Electronics leveraged ETFs need to rise by about 109.4% to recover the principal, while SK Hynix leveraged ETFs need to rise by about 325.7%. In other words, a 50% loss requires a 100% gain to break even, while a 75% loss requires a 300% gain. Analysis points out that single-stock leveraged ETFs typically track twice the daily return of the underlying asset, not simply corresponding to the stock price increase. Due to the daily rebalancing of leverage ratios, continuous volatility generates "volatility decay," so even if the underlying stock price returns to its previous level, ETF investors may not necessarily be able to fully recover their principal.