The trigger is almost absurd. SK Hynix posted the most profitable quarter in Korean corporate history – 60.5 trillion won in operating profit, up over 550% (Bloomberg) – and it still missed estimates. The stock fell about 10%, the index dropped 8%, and Korea got its first back-to-back circuit breakers ever. July is now the worst month in KOSPI history.
But the earnings aren't the real story. The leverage is. Retail investors lost about $1.5 billion in those nine-week-old ETFs, and over 320,000 accounts were force-liquidated (IBTimes). The 2x SK Hynix product is down 80% from June while the stock itself is down far less. That's daily-reset decay: the underlying can recover, the 2x holder doesn't.
Nobody cut AI demand forecasts today. A company growing revenue 257% got sold anyway.
The US lists the exact same product structure.
And Microsoft and Meta report tonight into this exact mood….
Korea launched 2x single-stock leveraged ETFs 9 weeks ago. Today the finance minister apologized for them in parliament, and the KOSPI got halted for the second day in a row.
byu/valbolt ininvesting
Posted by valbolt
1 Comment
I think the concern is that all the cash flow from record profits will just be wasted on huge new fab investments and excessive worker bonuses, and then supply will just catch up to demand and bring prices down.