Foreign Media Alarmed by 'K-Leverage': "Stocks Are the Only Salvation When Real Estate Is Unattainable"

Reuters has described the launch of single-stock leveraged ETFs for Samsung Electronics and SK Hynix, which are cited as the cause of recent extreme volatility in the domestic stock market, as a policy failure by the South Korean government.

Reuters highlighted the case of a 24-year-old who lost 300 million won in stock assets in just four weeks, warning of the dangers of leveraged investment in South Korea.

The individual, identified as Lee, who was interviewed by Reuters, expressed a profound sense of loss and pressure, stating, "I grew the 20 million won I saved during my military service into 300 million won, but I lost both the principal and the profits due to the recent extreme market volatility."

Reuters pointed to South Korea's housing prices as the root cause driving young people toward such high-risk speculation.

The analysis suggests that with the average price of an apartment in Seoul reaching 14 times the average annual salary, young people who feel that accumulating assets through ordinary efforts is impossible have turned to high-risk leveraged stock investments as their only escape.

In his interview with Reuters, Lee confessed, "I felt like I was living in an era where I could not afford to buy real estate," adding that "stock investment was the only path to salvation."

The balance of margin loans in the domestic stock market has hit an all-time high, and total debt has surpassed 60 trillion won.

In response, financial authorities moved quickly on July 16 to ban the new listing of single-stock leveraged ETFs and introduced supplementary measures, but questions remain as to whether these will be enough to calm the market volatility caused by these leveraged products.

Citing an interview with Cho In-gi, a senior financial market strategist at the online trading platform Exness, Reuters pointed out, "As the head of the Financial Supervisory Service has already admitted that these leveraged products were approved too hastily, this is a process of correcting a known policy error."

Reported by Lee Hyeon-yeong | Video by Lee Da-in | Graphics by Yang Hye-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.