Leverage ETF Rules Loom as Korean Investors Pile into '3x ETFs'

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "AI-based personalized news recommendation and summarization service" developed with support from the Korea Press Foundation. It selects and provides six customized news items for each reader type.

1. Growing AI Investment Jitters... 'Weathervane' Oracle Credit Risk Hits Record High

- Key Summary: Oracle's five-year credit default swap (CDS) premium surged to 2.03 percentage points annually, marking the highest level since statistics began in 2008. This is attributed to growing doubts over the monetization of Big Tech's massive AI investments, as Chinese AI startup Moonshot AI's "Kimi K3" showed performance close to major U.S. models. Spreads on Oracle's corporate bonds also widened across the board, and S&P Global Ratings downgraded the company's credit rating earlier this month, citing financial burdens from expanded AI investment. Morgan Stanley noted that while the risk of Oracle being immediately downgraded from investment grade to speculative grade is not high, its medium-term outlook depends on the execution of AI investments and monetization performance.

2. As Single-Stock Leverage Is Regulated... Korean Investors Pile into '3x ETFs'

- Key Summary: After the Financial Services Commission announced regulations raising the base deposit for single-stock leverage ETFs to 30 million won, investors are shifting to overseas index-type and sector-type leverage ETFs excluded from the regulation. Following the announcement, SOXL, which tracks the semiconductor index at triple leverage, rose to No. 1 in net buying of foreign stocks by domestic individual investors, and TQQQ, which tracks the Nasdaq 100 index at triple leverage, jumped to No. 2. Both products had ranked outside the top 50 in net buying before the announcement, making the fund movement clear. The financial investment industry forecast that this measure would create a balloon effect, moving funds to other unregulated products rather than reducing demand for leverage investment itself.

3. Plunging 29% a Day After Limit-Up... Samcheondang Pharm Under Investment Alert Over 'Suspicious Flows'

- Key Summary: Samcheondang Pharmaceutical plunged 29.79% toward its lower limit just one day after hitting a limit-up the previous day. Doubts arose over the substance of the U.S. Food and Drug Administration (FDA)-related news that had driven the previous day's surge, and market distrust grew after the company refused to disclose the original document, citing trade secrets. The Korea Exchange designated Samcheondang Pharmaceutical as an investment-caution issue for concentrated trading in a small number of accounts, citing that the participation rate of the top 10 buying accounts over the past three days reached 41.50%. Compared with the late-March peak when it held the top spot among KOSDAQ stocks, the share price has fallen 86.4%, and the extreme volatility is seen as inflicting growing losses on investors.

4. [Exclusive] Chasm 'Over'... LG Energy Solution to Restart Halted U.S. EV Battery Plant

- Key Summary: LG Energy Solution (373220) is preparing to restart the No. 1 plant of Ultium Cells, its joint venture with GM (General Motors) in Ohio, U.S. The company will progressively reinstate around 850 temporarily laid-off employees from the 27th through mid-August, with full-scale operation expected from the fourth quarter. The plant, which had shut down in January due to a sharp drop in EV demand, was decided for restart amid forecasts that recovery in EV demand would come earlier due to a surge in oil prices sparked by the Middle East war. With EV sales in Europe and Korea rising 15.3% and 92.1% respectively, LG Energy Solution's overall plant utilization rate is expected to rise from 46.9% in the first quarter to around 60% in the second half.

5. Korea Zinc (010130) to Inject 400 Billion Won into Australian Unit, Signs 3-Year PRS Deal with Meritz Securities

- Key Summary: Korea Zinc will raise approximately 400 billion won together with Meritz Securities to build a solar power and energy storage system (ESS) plant in Australia. Under the structure, its Australian subsidiary Richmond Valley Energy Reserve Holdings will issue convertible preferred shares, and a special purpose company (SPC) established by Meritz Securities will acquire them before signing a three-year price return swap (PRS) contract with Korea Zinc. The raised funds will be invested in a 200 MW-class solar power plant and a battery energy storage system (BESS) with 2,200 MWh of storage capacity, targeting commercial power generation in January 2029. Korea Zinc plans to nurture this investment as one pillar of its new growth strategy "Troika Drive," alongside resource recycling and secondary battery materials.

6. Hormuz Risk Reignites... Crude Oil ETFs All Ablaze

- Key Summary: As the armed conflict between the U.S. and Iran expanded to energy infrastructure, ETFs betting on rising oil prices swept the top return rankings in domestic and overseas markets. "KODEX WTI Crude Oil Futures (H)" and "TIGER Crude Oil Futures Enhanced (H)" rose 13.29% and 12.95% respectively from the 14th to the 20th of this month, taking the No. 1 and No. 2 spots in domestic ETF returns, while UCO, a U.S. 2x leverage crude oil ETF, surged 18.26%. Brent crude again topped $90 per barrel during trading on the 20th, and Bank of America (BofA) forecast that oil prices could exceed $100 per barrel if the conflict expands. Analysts in the securities industry diagnosed that the momentum of the domestic stock market also hinges on the direction of oil prices, saying the market can rebound only after a "peak-out" signal in oil prices is confirmed.