Odaily Planet Daily report: Today, during a cabinet meeting, South Korean President Lee Jae-myung noted that the market has widely criticized single-stock leveraged ETFs for "excessively amplifying market volatility," and called on relevant authorities to "promptly and thoroughly improve the relevant regulations." Although regulatory bodies have taken some measures, investors believe these products have exacerbated market volatility and declines, revealing inefficiencies at the policy level. In response to market controversies sparked by single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix, President Lee stated that financial regulators should swiftly develop and refine supporting measures, and consider implementing further strategies if necessary.
The Financial Services Commission of Korea explained that the launch of single-stock leveraged ETFs aims to reduce capital outflows caused by overseas stock investments and bring investors under domestic regulatory oversight. Leveraged products with 2x to 3x leverage already exist in overseas markets, and this move is intended to encourage capital to remain within Korea. The Commission noted that the scale of overseas leveraged products has declined, and Korean individual investors’ net investment in overseas stocks has dropped from approximately $40 billion for the full year last year to $2.8 billion in the first half of this year, contributing to exchange rate stability.
However, market participants have continued to question whether single-stock leveraged ETFs amplified market volatility during the recent sharp fluctuations in semiconductor stocks. In response, Lee Jae-myung emphasized that the South Korean government must closely monitor market impacts and implement additional measures if necessary. (NATE)