The Leveraged Tail Wags the Dog: Samsung & SK Hynex

Here's the headline: On June 23, 2026, U.S. semis took a big hit, for no U.S. reason at all. Big memory plays Samsung Electronics fell 12.31% and SK Hynix fell 12.47% in their worst 1-day showing since the 2008 financial crisis. The KOSPI dropped 9.99%. 

You might think the world was ending, and honestly, I don't have much opinion on what the "right" price for either of these companies is. But it's worth chasing down what actually happened, because it's much less about "how much Samsung is worth" and much more about quirks in South Korean market structure.  

Single Stock ETF Shenanigans

South Korean investors were blessed with their first first single-stock leverage and inverse ETFs on May 27, 2026. Sixteen in total, most targeting 2x the daily move of these two monster stocks.  They pulled in $3 billion day one and by June 23, had more than $9 billion. The Hong Kong-listed CSOP SK Hynix 2x product — which predates the Korean launch — swelled to roughly $16.8 billion, becoming the single largest ETF in Hong Kong (up nearly 900% at one point!).

All of these products are high-velocity retail bait.  Turnover in the first two weeks was nearly 125% per day. And this isn't some free-trading mecca: the head of South Korea's Financial Supervisory Service (their integrated regulator) said the products had "done little more than enrich securities firms at retail investors' expense," estimating brokerage commissions from them at $3 billion to $6.4 billion. Governor Lee Chan-jin, in translated remarks, said he had "many regrets" and wondered whether he "should have lain down and blocked it."

Just let that sink in for a minute. $6 Billion in brokerage commissions in two weeks?  And yet, these products look from the outside to be broken by design. Here are three reasons why these products stink, and how they'll continue to break for Korean investors (and how they'll pollute global markets with weird pricing).  (And for anyone wanting to get REALLY into the weeds, I recommend this excellent deep-dive from Asianomics)

The Problems: Time Gaps & Coffee Breaks.  

The Korean single stock products, rather than relying on over the counter swaps (like the U.S.), use their individual stock futures.  This makes sense in South Korea — it's a real market with available leverage.  It would make no sense in the U.S. as we haven't really had a single stock futures market since OneChicago shut down in 2020 (the U.S. dalliance with single stock futures is worth a chapter in a book somewhere on over/misregulation). But the point is: the individual stock futures market in Korea is legit, and closes trading at 3:45 — 15 minutes after the ETFs and stocks themselves stop trading at 3:30.  

This causes all sorts of predictable problems. On June 8th, for example, SK Hynix and the ETFs tracking it stopped trading at 3:30 in the midst of a brutal selloff. The futures traded down more for the next 15 minutes, at which point the ETF's NAV could be struck. This means the NAV of the ETF ended up being 6-7% below the last-traded price... a premium!  Usually, you expect premiums when something is ripping higher and everyone wants in. In this case, the premium is actuall time-arbitrage, in the opposite direction of what you'd expect.  And this happens every single day, at some level, in every single Korean single stock levered ETF.

The second major issue is that in the last 10 minutes of the trading day, liquidity providers — what we would think of as designated market makers and authorized participants — don't have to play at all.  They basically walk away from the last 10 minutes and let the closing auction set prices. The U.S. has had plenty of issues around how we open and close stocks thanks to two flash-crashes (I wrote a field guide to the flash crashes of 2010 and 2015 a decade ago). One thing we learned: when market makers "step away," the results are essentially inevitable: the only people left in the order book are retail traders with lingering orders, and when they get matched, the trades (and thus, the tape at a critical moment) can be wildly unpredictable.  

What Next? What about the U.S.?

While I am absolutely not an expert on Korean market structure, I don't see any evidence that they're introducing single-stock circuit breakers, market maker obligations, new timing rules or erroneous trade protections. That means, for now, the movement of these geared ETFs is a petri dish of real-world experiments for anyone looking for a PhD thesis. We can and should absolutely expect darlings in Korea (and other Asian markets) to behave in ways we don't expect here (and for sure, that can impact a heavily concentrated ETF like Roundhill's DRAM, or a Korea focussed ETF like iShares EWY).

But the good news is: that's really it. Yes, Samsung and SK Hynix (and whomever becomes tomorrow's darling) may swing wildly, and that can have some impact on related securities here in the U.S. market. Korean regulators will have to make their own calls about what curbs or protections to put in place, but that's, to be blunt, their problem.

Our challenge, as U.S. investors, is not to over-read price movements in international stocks.  While price is always to some extent the indicator of "sentiment," it would be a mistake to read Korean single stock volatility as global market signal.

Be careful out there.  It's getting weird.