As urgent warnings to investors in single-stock leverage exchange-traded funds (ETFs) for Samsung Electronics and SK Hynix pour in, securities industry analysis shows that even if the underlying asset's original stock price fully recovers, related leverage products face inevitable massive losses of up to 75%, shocking the market.

With today's simulation results from Hanyang Securities and recent warnings from key figures in financial circles being announced, concerns about massive losses among Samsung Electronics and SK Hynix single-stock leverage ETF investors are intensifying. In particular, experts point out that due to the structural characteristic of leverage products known as the "negative compounding effect," when stock price volatility repeats, the final rate of return can significantly differ from twice the rate of return of the underlying asset.

Leverage ETFs are designed to track twice the daily rate of return of the underlying asset. However, when stock prices fluctuate repeatedly, as the investment period lengthens, the rate of return increasingly deviates from twice that of the underlying asset. Particularly in situations where stock prices fall and then recover, a "negative compounding effect" occurs that seriously erodes the investment principal.

According to Hanyang Securities' simulation data, Samsung Electronics' stock price fell 15.2% over approximately two months from May 27 to the 22nd of this month, while the related ETF plummeted 40.2%. During the same period, when SK Hynix's stock price dropped 18.4%, the related ETF recorded a 49.4% loss.

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More serious is the simulation result assuming a scenario where the original stock fully recovers to its starting price. According to Hanyang Securities' analysis, even if the original stock recovers after six months, the leverage ETF would show losses of at least 39.78% to a maximum of 50.27%. After one year, losses of at least 63.42% could occur, and in the case of SK Hynix single-stock leverage, warnings have been issued of losses up to a maximum of 75.44%. This means investment capital could be reduced to one-quarter of its original value.

In the actual market, the warnings are becoming reality. Yesterday, the 28th of this month, SK Hynix single-stock leverage ETF fell around 28%, and Samsung Electronics single-stock leverage ETF fell around 26%. On the 29th, SK Hynix single-stock leverage ETF declined 18-21%, and Samsung Electronics single-stock leverage ETF fell 8-10%, showing declines of more than 40% over the past two days.

Financial experts are issuing successive warning messages to investors. Bae Jae-gyu, CEO of Korea Investment Trust Management, posted an article analyzing the performance of individual stock leverage and inverse products, strongly advising, "Even if the original stock price returns to its original level over time, there is a high possibility the ETF price will not. Please stop investing now." While the article was deleted after posting, the expert's sincere concerns were fully conveyed.

Hanyang Securities emphasized the importance of "expanding financial education content" and "spreading sound investment culture" regarding this situation. It is a warning against investors engaging in speculation aiming only for short-term high returns without sufficiently understanding the complex structure of leverage ETFs and the "negative compounding effect." To avoid the tragedy of ETF prices failing to recover even when stock prices do, careful investment is more necessary than ever.