Analysis: South Korean politicians are using 2x leveraged ETFs to criticize the government

Odaily Planet Daily News Bloomberg ETF analyst Eric Balchunas posted on X platform that during the hearing, Lee Jongwook, a lawmaker from the People Power Party of South Korea, said to Koo, "This country has turned into a casino. These products should never have been allowed on the market. I believe this is a policy failure."

Eric Balchunas stated that South Korean politicians are using 2x leveraged ETFs to criticize the government, but the reason for the bubble and correction is that the AI boom has sparked massive interest in memory chip manufacturers, and 2x leveraged ETFs are just a tool to gain exposure to such stocks. He also mentioned that South Korea may not be the best market for 2x single stock ETFs, as the underlying stocks lack liquidity, making derivative products more likely to affect the underlying in reverse.