Foreign investors' share of leverage product trading rises to 35–45%; analysts say two-track strategy maximizes returns amid sector rebalancing

The Kospi and Samsung Electronics share prices are displayed on a board at the dealing room of Woori Bank's headquarters in Jung-gu, Seoul, on June 2. Samsung Electronics' market capitalization surpassed 2,000 trillion won (about $1.31 trillion) intraday that day, the first time a single company had crossed that threshold. [Yonhap]
The Kospi and Samsung Electronics share prices are displayed on a board at the dealing room of Woori Bank's headquarters in Jung-gu, Seoul, on June 2. Samsung Electronics' market capitalization surpassed 2,000 trillion won (about $1.31 trillion) intraday that day, the first time a single company had crossed that threshold. [Yonhap]

Foreign investors have recently turned to net selling in Samsung Electronics and SK Hynix — the two flagship semiconductor stocks on the Korean market — while running a two-track strategy of alternating net purchases and net sales in single-stock leverage products tied to the same companies.

Analysts say the pattern reflects a deliberate approach: locking in gains on shares that have surged sharply this year to rebalance portfolios, while actively trading single-stock leverage products to maximize returns.

According to Korea Exchange data released Sunday, foreign investors net sold 124.6 billion won worth of seven SK Hynix single-stock leverage products from May 27 — the day those products were first listed — through June 12.

Breaking it down by session, foreigners were net sellers on seven of the 12 trading days and net buyers on five, effectively ping-ponging between buying and selling in quick succession.

The seven Samsung Electronics single-stock leverage products showed a similar pattern. Foreign investors posted net selling of 17.5 billion won in those products over the same period, with net selling recorded on seven days and net buying on five.

Notably, six of the seven Samsung Electronics single-stock leverage products — all except the TIGER product — saw foreign investors' cumulative purchases exceed their cumulative sales over the period.

By contrast, foreign investors sold Samsung Electronics shares outright for 10 consecutive trading days from May 27 through June 10, and SK Hynix for 23 consecutive trading days from May 7 through June 10, before turning to net buying on June 11. As a result, foreigners' cumulative net selling from May 27 through June 12 reached 12.6098 trillion won in Samsung Electronics and 7.8761 trillion won in SK Hynix, surpassing 20 trillion won combined. The foreign ownership ratio in the two stocks also fell to 47.58% on June 12, the lowest level so far this year.

Analysts attribute the behavior to profit-taking driven by the sharp rally in large-cap semiconductor stocks this year, with investors trimming positions to rebalance portfolios. At the same time, they say the underlying strength of the semiconductor industry keeps both stocks attractive, prompting foreign investors to use single-stock leverage products to capture additional upside.

"Single-stock leverage products offer advantages in terms of ease of trading, bid-ask spreads and costs," said Lim Eun-hye, head of the ETP strategy team at Samsung Securities. "As a result, foreign investors have been frequently alternating between long and short positions in single-stock leverage products, in contrast to their aggressive outright selling of the underlying shares."


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