Top South Korean policymakers apologise for single-stock leveraged ETFs
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The introduction of single-stock leveraged exchange-traded funds has been blamed for intensifying a rout in the country’s stock market.
PHOTO: AFP
- South Korean policy makers apologised for introducing single-stock leveraged ETFs that worsened the stock market downturn, especially affecting chip stocks like Samsung Electronics and SK Hynix.
- Finance Minister Koo Yun-cheol and Financial Services Commission chairman Lee Eog-weon admitted they failed to regulate these products properly amidst strong public criticism.
- The Kospi index dropped 12.6 per cent on July 29, with Samsung and SK Hynix shares falling sharply despite strong earnings, highlighting risks for retail investors betting on AI-driven demand.
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SEOUL – Top South Korean policymakers apologised on July 29 over the introduction of single-stock leveraged exchange-traded funds (ETFs), which have been blamed for intensifying a rout in the country’s stock market.
Finance Minister Koo Yun-cheol said he was sorry for introducing the product without careful consideration, responding to a lawmaker’s demand for an apology during a parliamentary session.
At another parliamentary session, the country’s top financial regulator made similar comments, after several lawmakers criticised the release of the funds for exacerbating a sell-off in South Korean equities in July.
“As the ultimate authority responsible for the financial markets, we feel sorry that we have fallen short in properly meeting the public’s expectations” over regulating the product, Lee Eog-weon, chairman of the Financial Services Commission, told the hearing.
The apologies came as the benchmark Kospi plummeted as much as 12.6 per cent on July 29, led by losses in South Korean chip stocks Samsung Electronics and SK Hynix, which together account for nearly half of the index’s market capitalisation.
The regulator’s approval of single-stock leveraged ETFs has come under fire as South Korean retail investors pumped money into the product, mostly tied to Samsung or SK Hynix, betting on no let-up in robust demand for artificial intelligence.
Shares of Samsung Electronics fell as much as 14 per cent on July 29 in Seoul trading. SK Hynix plunged as much as nearly 20 per cent, despite reporting record earnings. REUTERS
