Global banks have begun tightening the terms of leveraged bets on South Korea’s two biggest chipmakers, SK Hynix and Samsung Electronics, after both stocks surged dramatically this year. Citigroup, JPMorgan Chase, Goldman Sachs and others are raising financing rates and limiting new swap sizes, prompting hedge funds to reassess their exposure.

Banks raise swap financing to as high as 11% for SK Hynix and Samsung

According to the source, financing rates on swaps for the two Korean stocks have been lifted to a range of 300 basis points up to 11% over the secured overnight financing rate (SOFR). With SOFR at 3 .6%, the top‑end cost approaches 15%, a stark jump from the 1‑2% premium seen in early May. The steep increase reflects banks’ desire to price in the risk of a sudden correction after a rally that saw SK Hynix’s share price more than triple and Samsung’s rise over 175%.

Morgan Stanley refuses new swap trades on the two Korean chipmakers

The report notes that Morgan Stanley is outright turning away clients seeking fresh swap contracts on SK Hynix and Samsung,while several mid‑tier banks have halted additional orders in the past two weeks. This curtailment precedes the recent sell‑off, suggesting that banks anticipated heightened volatility and chose to protect their balance sheets before the market cooled.

Kospi’s 100% gain fuels bank caution amid tech‑stock boom

South Korea’s benchmark Kospi Index has jumped roughly 100% this year, making it the world’s top‑performing market, largely on the back of the chipmakers’ gains. As the source explains, the rapid ascent has sparked fears of a bubble, prompting banks to worry that a sharp pull‑back could trigger margin calls and potential defaults from hedge fund clients.

ETF inflows push SK Hynix and Samsung to dominate memory funds

Roundhill Investments’ actively managed Memory ETF now holds $16.7 billion, with SK Hynix and Samsung together accounting for more than 40% of its assets. Similarly, CSOP Asset Management’s leveraged Hong‑Kong‑listed ETF, which aims to double daily SK Hynix performance, has surpassed $10 billion in assets... The source says these inflows have amplified the stocks’ weight in the Kospi, where they now represent about 53% of the index—more than double their combined share five years ago.

Who will fund hedge‑fund bets if banks pull back?

With major banks tightening credit, the report highlights a lingering question: which counterparties will step in to provide the leverage hedge funds rely on? Few firms are willing to take bearish positions on the soaring chip stocks, leaving banks to potentially use their own balance sheets—a scenario that could further constrain markt liquidity.