South Korean stock market plummets, retail investors turn to high interest ELS products

After the stock market crash, Korean retail investors turned to ELS products with an annualized coupon rate of 40% to 50%. ELS sales reached a three-year high in July, and products linked to Samsung Electronics and SK Hynix were favored. Regulatory authorities are curbing retail demand for single stock leveraged open-end index funds, which amplified the 22% decline in the South Korean Composite Index last month. The market crash has not weakened individual investors' risk appetite. ELS products provide coupon when the linked stocks or indices maintain a predetermined range, but face downside risks when the market falls sharply.