As the KOSPI repeatedly sets record highs and approaches the 8,000 mark, anxiety is mounting among inverse investors betting on a market decline. In particular, as the price of the so-called "gop-beoseu" (2X inverse) exchange-traded funds (ETFs), which track twice the inverse of the index's decline, has fallen to the low 100-won range, fears of delisting are spreading among retail investors.
According to the Korea Exchange on Tuesday, the third-most net-purchased ETF by retail investors between the 4th and 8th of this month was Samsung Asset Management's KODEX 200 Futures Inverse 2X. Net purchases during the period reached 242.7 billion won.
Over the same period, the KOSPI surpassed the 7,000 level for the first time in history, and on Tuesday the index closed at 7,822.24, up 324.24 points or 4.32% from the previous session. However, some retail investors judged that the market had reached a peak and instead increased their bets on a decline. Over the past month, retail investors have poured nearly 600 billion won into 2X inverse ETFs.
By contrast, as the market rally continues, prices of 2X inverse ETFs have plunged. The KODEX 200 Futures Inverse 2X has posted a one-month return of -43%. On Tuesday, it fell more than 10%, briefly dropping to 108 won during the session.
◇What Are the Delisting Criteria for ETFs and ETNs?
As prices have fallen to the 100-won range, concerns about delisting are spreading among investors. In fact, on the 28th of last month, four 2X inverse KOSPI 200 futures exchange-traded notes (ETNs) issued by Mirae Asset Securities, KB, Samsung, and Shinhan Investment & Securities saw their market prices fall below 1,000 won, triggering early liquidation (delisting) procedures.
However, ETFs have different delisting criteria from ETNs. ETFs are delisted not simply when prices fall, but when "net asset value remains below 5 billion won" for a certain period. The net asset value of KODEX 200 Futures Inverse 2X is approximately 930 billion won, far exceeding the delisting threshold, making immediate delisting unlikely.
◇The Real Problem Is "Widening Disparity"—Returns Swing on a 1-Won Difference
The market points to widening price disparity as a bigger problem than delisting. When an ETF price falls below 100 won (penny stock territory), the weight of the 1-won tick, the bid-ask price unit, rises sharply. For example, if the bid price is 100 won and the ask price is 101 won, even a 1-won gap creates a bid-ask spread of 1%.
The market is raising the need for price normalization through measures such as reverse splits to prevent order-book gaps and widening disparities. However, with no related regulations currently in place, it is difficult for asset managers to respond immediately on their own.
Meanwhile, the Financial Supervisory Service (FSS) announced Tuesday that it will conduct a risk review on excessive short-term trading by domestic retail investors. According to the FSS, the average daily turnover rate in the KOSPI market last month was 1.48%, 6.7 times that of the U.S. S&P 500 (0.22%) and four times that of Japan's Nikkei (0.37%).
