KOSPI Plummets Amid Oil Instability... Leverage Measures to Be Forwarded

[Anchor]

Hit by the surge in international oil prices, the South Korean stock market plummeted by more than 5%. As such severe volatility involving sharp ups and downs continues, financial authorities have decided to move up the implementation of reinforced deposit requirements for single-stock leverage products from next month to the end of this month.

Reporter Lee Tae-gwon has the details.

[Reporter]

The KOSPI, which had recovered the 7,000 mark yesterday (July 23), plunged right as the market opened, falling back down to the 6,000s in just a single day.

A sidecar was triggered for the 41st time this year, and the index ultimately closed down 5.7% at 6,690.

As concerns over inflation grew due to surging international oil prices, market rates moved first on expectations that U.S. benchmark interest rates would face upward pressure.

The yield on 10-year U.S. Treasury bonds rose to 4.7%, a one-and-a-half-year high, impacting the domestic stock market as well.

[Park Sang-hyun / Research Fellow, iM Securities: If interest rates rise, it could stimulate concerns that capital expenditures by big tech companies might slow down, which ultimately connects to negatively affecting the domestic semiconductor market.]

The two semiconductor heavyweights plummeted by over 7%, and foreign investors net sold more than 3.2 trillion won, marking the first net selling of this week.

Amid criticism over excessive volatility, even President Lee Jae-myung called for a prompt response regarding single-stock leverage ETFs on the 21st, prompting financial authorities to accelerate the implementation of supplementary measures originally scheduled for next month.

First, starting on the 31st, the basic deposit requirement will be raised from 10 million won to 30 million won.

Securities such as stocks or bonds that were previously recognized as deposits up to 70% of their market value will no longer be accepted, and the 30 million won must be entirely in cash.

If securities were sold to meet the deposit criteria, the proceeds will only be recognized as deposits after two trading days when the funds are actually deposited in cash.

Since selling proceeds cannot be used for same-day purchases, repetitive day trading will be blocked unless 30 million won in cash is fully tied up.

Starting August 19, the discrepancy rate—the difference between the leverage ETF trading price and its actual asset value—will be tightened and managed from the current 3% to 2%.

(Photo: Park Jin-ho | Video Editing: Jung Yong-hwa | Design: Kim Han-gil)
※ Please note: This article was translated by AI and may contain errors.