[Anchor]
The KOSPI, which had recovered to the 7,000 level yesterday (July 15), plunged 6.4% today, falling back to the 6,800 range. Influenced by the weakness of semiconductor stocks in the U.S. market overnight, Samsung Electronics and SK Hynix also saw significant declines. While a sidecar was triggered only three times last year, it has already been activated 37 times this year. Notably, 19 of these instances occurred after the launch of single-stock leverage ETFs. In response to ongoing criticism that these products are fueling volatility, the government announced countermeasures today.
Reporter Baegun has the details.
[Reporter]
The government held a market situation inspection meeting presided over by Deputy Prime Minister for Economy Koo Yun-cheol and announced supplementary measures for single-stock leverage products linked to Samsung Electronics and SK Hynix.
This follows criticism that the concentration of trading volume in these products, which reflect twice the price volatility of the underlying stocks, has increased overall market volatility.
First, the government decided to raise the basic deposit required for leverage investment from 10 million won to 30 million won.
Furthermore, the policy of recognizing up to 70% of stock holdings as a deposit will be changed to accept only cash.
Previously, even without cash, an investor could trade leverage ETFs if they held 15 million won worth of stocks, as it was recognized as a 10.5 million won deposit. Now, investors must have 30 million won in cash.
The trading unit, which currently allows transactions of one share at a time, will also be expanded to 20 shares.
These measures are all intended to curb demand from small-scale investors seeking short-term profits.
The change in the basic deposit requirement is scheduled to be implemented next month, while the change in trading units is expected to take effect in November, considering the time required for securities firms to update their systems.
Additionally, the mandatory education time for investing in single-stock leverage products will be increased to three hours, and the new listing of single-stock leverage products will be temporarily suspended.
Financial authorities predict that the market capitalization of leverage ETFs, currently at 12 trillion won, will shrink to the 4 trillion won range.
While experts anticipate that new investment demand will be suppressed, some analyze that the effectiveness in reducing volatility may be limited.
[Interview] Kim Jae-seung / Researcher at Hyundai Motor Securities: "In the short term, there will likely be an effect of reducing trading volume. However, since the volatility of semiconductor stocks is extreme globally, I think the volatility of the KOSPI may continue for the time being."
The government stated that it will monitor market trends and consider additional measures if necessary.
Reported by Shin Jin-soo | Video by Park Na-young | Graphics by Kang Yoon-jung | Produced by SBS Digital News
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