Wreaths of Condolence Line Up Ahead of National Assembly Calling for Immediate Delisting... Aftershocks Hit with Delayed New ETF Reviews

In front of the National Assembly building in Yeouido, Seoul, dozens of funeral wreaths have lined up.

These wreaths are calling for the delisting of single-stock leverage exchange-traded funds (ETFs).

Investors launched the protest as heavy losses hit retail investors following the plunge of single-stock leverage ETFs linked to Samsung Electronics and SK Hynix.

The aftershocks are rapidly spreading across the domestic ETF market as a whole.

As a sharp decline in the stock market substantially reduced ETF net assets, tens of trillions of won evaporated.

According to fund evaluation service providers, the total net assets of listed domestic ETFs stood at 434.49 trillion won as of the end of June, a decrease of more than 77.9 trillion won from a month earlier.

Although the domestic ETF market opened the era of 500 trillion won following the launch of leverage ETFs at the end of May, the growth momentum sharply stalled amid overlapping concerns over a slowdown in the semiconductor industry and a plunging stock market.

In particular, the market is cooling down rapidly as massive capital outflows continue from single-stock leverage ETFs, which had led market expansion.

KODEX SK Hynix Leverage saw its net assets decrease by more than 3.6 trillion won over the past month alone, with massive capital outflows continuing in other single-stock leverage items as well.

In addition, following the implementation of financial authorities regulations, trading value dropped to the 1.2 trillion won level, shrinking to one-tenth of the level before the regulations.

While there are expectations that rapid market volatility will be somewhat mitigated in line with the contraction of leverage ETF trading value, the problem is that schedules across the financial market are also facing disruptions as government tasks related to regulatory responses are piled up.

The Korea Exchange has reportedly notified asset management companies that reviews for new ETF listings this month could be delayed.

Amid ongoing tasks such as supplementing systems related to single-stock leverage and applying the corresponding computer systems, possibilities have been raised that the introduction of the ETF after-market trading, initially pushed for next month, will also be delayed.

(Reported by Lee Hyeon-yeong | Video by Choi Gang-san | Graphics by Lee Su-min | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.