South Korean President Responds to Samsung, SK Hynix Single-Stock Leveraged ETF Controversy: Strengthen Regulations When Necessary, Expedite Supplementary Plans

Odaily Planet Daily News: South Korean President Lee Jae-myung stated at a state council meeting today that the market widely criticizes single-stock leveraged ETFs for "excessively amplifying market volatility" and urged relevant authorities to "swiftly and adequately improve related systems." Although regulatory bodies have taken certain measures, investors believe that these products have exacerbated market fluctuations and declines, exposing issues of policy efficiency. In response 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 supporting measures as soon as possible, and consider studying and introducing further countermeasures when necessary.

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

However, market participants continue to question that single-stock leveraged ETFs have amplified market turbulence during the recent sharp fluctuations 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)