Seoul stocks have been tanking since mid-June, when the bullish market took a sharp turn as investors rushed to dump shares of Samsung Electronics and SK hynix amid growing concerns over the sustainability of Big Tech companies’ unprecedented investments in artificial intelligence (AI).

After surging to as high as 9,385.59 points on June 19, the benchmark KOSPI tumbled to as low as 5,262.77 points on July 29. Although some market correction was inevitable following KOSPI’s unprecedented rally, driven by the two Korean chip giants amid the global AI investment boom over the past year, single-stock leveraged exchange-traded funds (ETFs) tied to the two companies have been widely blamed for amplifying market volatility.

Unlike conventional leveraged ETFs, which track broader indexes such as the KOSPI 200 or the S&P 500, the controversial products, launched on May 27, provide leveraged exposure to individual stocks, allowing investors to gain or lose twice the daily return of the underlying shares.

Fueled by the AI-driven chip rally, the products rapidly gained popularity among investors. But trouble began when market sentiment turned downward soon after their launch. While gains are amplified during rallies, losses are likewise magnified during downturns.

Because Samsung Electronics and SK hynix account for more than half of KOSPI’s market capitalization and trading value, sharp movements in........

© The Korea Times