South Korea's finance ministry considers capping single-stock leveraged ETFs at 20% of retail investors' portfolios to reduce stock market volatility.
South Korea's Finance Minister Koo Yun-cheol stated the government is considering measures to address issues caused by newly introduced single-stock leveraged ETFs, which are blamed for increased stock market volatility. These ETFs track major companies like Samsung Electronics and SK hynix, contributing to sharp swings in the KOSPI index.
South Korea's financial watchdog chief, Lee Chan-jin, expressed serious concerns about the side effects of newly introduced single-stock leveraged ETFs, particularly those tracking Samsung Electronics and SK hynix. The agency is considering measures to protect investors from extreme volatility and potential losses.
South Korea's Financial Services Commission announced single-stock leveraged and inverse ETFs will launch on the local stock market in late May. The products can provide up to twice the daily performance of an underlying stock. Only stocks with average market capitalization exceeding 10% of total market value and average turnover above 5% qualify as underlying assets.
