South Korean President Responds to Controversy Over Samsung and SK Hynix Leveraged ETFs: Strengthen Regulations if Necessary, Expedite Supplementary Measures

Odaily Planet Daily News: South Korean President Lee Jae-myung stated at a Cabinet meeting today that the market generally criticizes single-stock leveraged ETFs for "excessively amplifying market volatility" and demanded that relevant authorities "quickly and sufficiently improve related systems." Although regulators have taken certain measures, investors believe these products have exacerbated market fluctuations and declines, exposing efficiency issues in policy implementation. Responding to the market controversy sparked by single-stock leveraged ETFs for Samsung Electronics and SK Hynix, Lee Jae-myung said financial regulatory authorities should formulate and perfect relevant supplementary measures as soon as possible, and consider introducing further countermeasures when necessary.

The South Korean Financial Services Commission explained that the introduction of single-stock leveraged ETFs aims to reduce capital outflows resulting from overseas stock investments and bring investors under the domestic regulatory framework. Currently, 2x to 3x leveraged products already exist in overseas markets, and this measure helps guide funds to remain in the South Korean market. The Commission stated that the scale of overseas leveraged products has declined, and South Korean individual investors' net overseas stock investment decreased from approximately $40 billion for the entire year of last year to $2.8 billion in the first half of this year, playing a role in stabilizing the exchange rate.

However, market participants continue to question that single-stock leveraged ETFs have amplified market turmoil during the recent period of significant volatility in semiconductor stocks. In response, Lee Jae-myung emphasized that the South Korean government needs to continuously monitor market impacts and introduce additional measures when necessary. (NATE)