South Korean derivative-linked securities reach three-year high

The total balance of derivative-linked securities and bonds in South Korea reached 96.7 trillion won as of the end of June, marking a three-year high. This represents a 10.9% increase compared to the same period last year, driven by rising stock prices and increased investment demand.

Derivative-linked securities (ELS/DLS), which are non-principal protected products, saw their balance slightly decrease to 17.6 trillion won. While new issuances rose by 21.2% to 14.3 trillion won, early redemptions surged by 42.2% to 14.5 trillion won due to the upward trend in domestic and international stock markets. The KOSPI 200 was the most common underlying asset, accounting for 84.6% of the share.

In contrast, derivative-linked bonds (ELB/DLB), which offer principal protection, saw a significant increase in demand. The balance for these products rose by 14.0% year-on-year to 79.1 trillion won. The Financial Supervisory Service advised investors to carefully understand product structures, noting that higher returns or a greater number of underlying assets can increase risk.