Korean Central Bank Warns: Single-Stock Leveraged ETFs Targeting SK Hynix and Samsung Electronics Could Amplify Market Risk

Odaily Planet Daily reported that the Bank of Korea has disclosed in a written document submitted to the National Assembly that the rapid expansion of single-stock leveraged ETFs targeting Samsung Electronics and SK Hynix may be amplifying the structural "herding" and volatility risks in the Korean stock market. The combined market capitalization and trading volume share of the two companies in the Korean stock market has risen significantly, with the market capitalization share increasing from approximately 36.1% at the end of last year to over 55% recently, and the trading volume share jumping from 27.9% to 63.5%.

South Korea's financial regulatory authorities have also expressed similar concerns, emphasizing the need to continuously monitor the potential impact of such products on market stability and systemic risk. Single-stock leveraged ETFs may exacerbate one-way capital flows during shifts in market sentiment. If the market trend reverses, combined with intraday rebalancing and derivative hedging mechanisms, it could further amplify price volatility. (Etoday)