Even Asset Management CEO Warns "Stop Investing": What Further Measures Are Coming?

[Anchor]

Although supplementary measures for single-stock leverage ETF products, which were released last week, are set to take effect next month, the investment frenzy in the market shows no signs of cooling down. The situation has reached a point where even the CEO of an asset management firm handling these products has stepped forward to urge investors to stop.

Reporter Min Gyeongho explores what additional measures could be taken to calm the current situation.

[Reporter]

Today (July 21), the market capitalization of single-stock leverage products for Samsung Electronics and SK Hynix listed on the KOSPI reached 9.7 trillion won, while the trading volume stood at 10.4 trillion won, exceeding the market cap.

Despite financial authorities announcing measures related to volatility mitigation on July 16, extreme turnover continues amid high interest in leverage products.

Voices of concern are growing louder.

As the phenomenon of negative compounding—where the ETF principal itself shrinks during the process of repeated sharp fluctuations and accumulated losses and recoveries—has become severe, the CEO of an asset management firm operating these single-stock leverage products wrote on social media, "Stop investing."

By releasing internal analysis data, the CEO warned that when the SK Hynix stock price fell by 17.9 percent, the leverage product fell by 47.5 percent, exceeding double the 35.8 percent decline.

Financial authorities have begun discussions with the relevant industry to see if the previously announced measures can be implemented earlier than planned.

It was decided that starting next month, the basic deposit requirement will be raised to 30 million won in cash and pre-investment education will be strengthened; the key is whether the necessary computer system updates can be completed quickly.

As the authorities aim to reduce the market capitalization to the 4 to 5 trillion won level seen during the early days of listing, diversifying the rebalancing time is being considered as the next potential card.

The rebalancing process, where asset managers buy or sell the underlying stock to match the 2x volatility rate, increases market volatility. The proposed method involves spreading out the rebalancing, which currently takes place 30 minutes before market close, across multiple time slots.

[Interview] Choi Jae-won / Professor, Department of Economics, Seoul National University: Extending the rebalancing time has the advantage of reducing the shock to the market, but it increases the tracking error. Situations like, 'Samsung Electronics rose 5 percent, so why did my 2x ETF only rise 9 percent?' could occur.

Financial authorities plan to review what difficulties exist regarding intraday rebalancing and whether there is a need to prepare separate incentives.

The KOSPI closed higher at 6,747 today, showing high volatility amid the 39th sidecar activation of the year.

(Video reporting: Choi Ho-jun, Video editing: Choi Hye-young)
※ Please note: This article was translated by AI and may contain errors.