According to Societe Generale, South Korean retail investors are rotating out of leveraged exchange-traded funds and into structured products linked to semiconductor stocks, indicating a shift in investment vehicle preference rather than a cooling of overall demand. Strategists including Rajat Agarwal noted in a research report that while inflows into single-stock leveraged ETFs have slowed over the past six weeks, ordinary stock buying remains robust and structured product issuance has climbed, suggesting the trend reflects a change in instrument choice rather than weakening retail appetite.

Issuance of structured products tied to Samsung Electronics, SK Hynix, and the KOSPI 200 index has surged nearly threefold since its May low, reaching 3.4 trillion Korean won and 4.3 trillion Korean won respectively in July, before easing somewhat in August. Single-stock leveraged ETFs listed in Hong Kong and South Korea, with Samsung Electronics and SK Hynix as underlying assets, have seen cumulative inflows drop nearly 20% since peaking in mid-July, while assets under management have contracted by more than 60%.

Despite the recent pullback, domestic retail investors in South Korea remained net buyers of semiconductor stocks throughout July and August, fully offsetting cumulative outflows from foreign investors during the same period. Improving valuation conditions, positive earnings growth expectations, enhanced shareholder return policies, and sustained retail demand all point to a favorable environment for ongoing structured product issuance in South Korea.