SK Hynix's leveraged ETF raked in $1.6 billion in the first quarter, becoming the world's most lucrative single-stock leveraged ETF

Zhītōng Caijīng APP learned from reports that the leveraged ETF tracking Korea’s storage-chip giant SK hynix has delivered astonishing performance in the first quarter of 2026, with its global net capital inflows historically surpassing those of related products tied to traditional tech leaders Tesla (TSLA.US) and Microsoft (MSFT.US). Specifically, the data shows that the Southbound Eagle SK hynix daily 2x leveraged ETF listed in Hong Kong is a single-stock exchange-traded fund, designed to achieve two times the daily return of the underlying stock’s performance. In the first three months of 2026, the fund attracted nearly $1.6 billion in new capital—an amount sufficient to make single-stock leveraged instruments in the U.S. market at a long-term stand-in spot seem less competitive.

Investors’ frenzy for SK hynix is largely driven by its absolute dominance in high-bandwidth memory (HBM). As an indispensable part of Nvidia’s core industrial chain, SK hynix’s current price-to-earnings ratio still offers a clear valuation advantage over U.S. peers such as Micron Technology (MU.US). This “high-growth with relatively low premium” attribute makes it the preferred target when large funds allocate to the AI sector.

Meanwhile, the stock-price volatility recently triggered by geopolitical developments has not led to capital exiting; instead, it has fueled retail investors’ enthusiasm for high-frequency trading using 2x leveraged instruments as they try to seek higher returns in a choppy market. This aggressive speculation, layered on top of passive institutional allocations, has jointly boosted the activity level of this type of financial product.

“Investors’ enthusiasm for SK hynix seems to stem from its valuation advantage—its lower forward price-to-earnings ratio makes it look more cost-effective than U.S. memory peers,” said Gary Tan, an Allspring Global Investments fund manager, “As a leader in the global memory sector, this relative positioning drives strong inflows into these leveraged ETFs even amid geopolitical tension.” It is understood that

SK hynix, which produces advanced high-bandwidth storage chips for artificial-intelligence processors, currently has a forward P/E of 4.4x, while the Philadelphia Stock Exchange Semiconductor Index is 18x.

It is worth noting that the crowded trading of chipmaker stocks has suffered intense swings in recent months. First, it was plagued by worries about excessive spending plans and overvaluation; then the Middle East conflict broke out, triggering fears of soaring energy costs and rising interest rates, which led to a sharp market selloff.

At the same time, Google’s TurboQuant technology has also added further pressure to the market, because progress from this technology could reduce demand for certain types of storage devices. Since the ETF was launched in October last year, its assets under management have ballooned to $2.5 billion.

Driven by this surge in overseas investment, South Korea’s domestic regulatory environment has also seen a major breakthrough. South Korea’s financial regulators recently said that, to prevent excessive domestic capital from flowing into overseas derivatives markets, they plan to lift the long-standing ban on single-stock leveraged ETFs.

The first batch of 2x leveraged ETFs backed by Samsung Electronics and SK hynix as underlying assets are expected to be listed on the Seoul Exchange as early as May 2026. Market participants view this policy relaxation as an important step toward institutionalizing reforms in South Korea’s capital markets, aimed at keeping this huge trading liquidity within the domestic market and thereby enhancing domestic tech giants’ global pricing power.

It is worth noting that, according to data from the Korea Securities Depository, the Southbound Eagle 2x leveraged ETF became one of the most popular products in March. Bloomberg Industry Research analyst Rebecca Sin said: “After-hours additional two hours of trading time provided by the Hong Kong Stock Exchange after the close of trading in the Korean exchange may increase arbitrage opportunities between the two places.” She added that differences in currency exposure and hedging strategies could further drive demand.

On the capacity and capital-operations front, SK hynix is consolidating its leading advantage through multiple measures. In order to further narrow the valuation gap with U.S. semiconductor companies, reports say the company is planning to list in the U.S. by issuing American Depositary Receipts (ADRs), with a potential fundraising size as high as $10 billion, which would help it directly access the world’s largest pool of capital.

At the same time, the company has decided to invest about $8 billion to purchase ASML’s most advanced extreme ultraviolet lithography (EUV) equipment, to ensure it maintains a technological lead in the mass production of next-generation HBM products.

However, some analysts have also issued warnings, arguing that the memory industry may already have seen a valuation bubble. While the rapid accumulation of high-leverage capital has boosted stock prices in the short term, it also plants the risk of a cascading collapse when the market eventually retraces.