[Anchor]
Additional regulations are expected to be introduced regarding single-stock leverage products tied to Samsung Electronics and SK Hynix, which have been accused of fueling stock market crashes. The Financial Services Commission has mentioned a plan to cap the proportion of leverage products at up to 20% of total investment amounts.
Reporter Kim Hye-min has the details.
[Reporter]
The 1Q SK Hynix 2X Leverage ETF, which was listed in the 22,000-won range on May 27, has dropped to 8,625 won.
That is a 61% plunge over the course of two months.
Other 2X leverage products have also plummeted by 55% to 59%, with all 14 products failing to reach even half of their listing-day prices.
Due to a structure that tracks twice the daily return, extreme and repeated fluctuations in the stock market have accumulated the so-called "negative compounding effect."
These products have faced criticism for amplifying market volatility during the rebalancing process, where asset managers additionally buy or sell underlying shares to maintain the 2X fluctuation rate.
Since the listing of 2X leverage ETFs, sell and buy sidecars and circuit breakers have been triggered a combined 47 times, already matching the total number of triggers recorded during the entire year of the 2008 global financial crisis.
Reuters described the stock market as having "turned into a wild casino," while the Nihon Keizai Shimbun pointed out that South Korea's single-stock leverage products are even shaking the Japanese stock market.
[Kim Sang-bong / Professor of Economics, Hansung University: If the market were mature, it would be normal for it not to be heavily impacted by (leverage) ETF products. It seems that (government regulations) came out a bit weak. They will have some effect, but that effect may be somewhat limited.]
In response, the Financial Services Commission stated, "If demand does not sufficiently subside despite the supplementary measures for single-stock leverage ETFs, we will consider additional actions."
Total volume management measures, such as restricting the proportion of single-stock leverage to within 20% of individuals' total investment in financial investment products, have been mentioned.
Having decided to bring forward the hike of the investment deposit requirement to 30 million won to the 31st, the FSC also plans to sequentially introduce tougher pre-education evaluations, an additional hour of training, and stricter tracking error management.
(Photo courtesy of Lee Moo-jin | Video by Won Hyung-hee | Graphics by Kang Yoon-jung)
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.