Outrage Erupts Over Remark Saying "It Is Not All Because of Leverage"

[Anchor]

Single-stock leveraged ETFs have been pointed out as a major cause of such fluctuating stock prices. However, Cheong Wa Dae Policy Chief Kim Yong-beom sparked controversy by making remarks that attribute the cause to the market structure and retail investors. Both ruling and opposition parties summoned the heads of financial authorities to the National Assembly to question them on countermeasures.

Reported by journalist Kim Bo-mi.

[Reporter]

Cheong Wa Dae Policy Chief Kim Yong-beom, who is accompanying President Lee Jae-myung on his state visit to Brazil,

regarding the recent extreme volatility in the domestic stock market, stated, "People talk as if a significant number of problems boil down to a single-stock leveraged ETF, but that is not necessarily the case."

He then emphasized, "We need to check the overall situation, not just leveraged ETFs."

His remarks placed weight on structural factors in South Korea's capital market.

At yesterday's (the 29th) full meeting of the National Assembly's National Policy Committee.

Lawmakers from the People Power Party criticized Chief Kim's remarks as "sophistry to evade responsibility."

[Shin Dong-wook / People Power Party Lawmaker: 'It is not just happening in our country,' they are saying things like this. Is this a remark that meets the public's expectations?]

They also demanded a parliamentary investigation, asking to reveal the background behind how the product in question was swiftly approved in just four months.

[Park Dae-chul / People Power Party Lawmaker: We diagnose that this plunge incident is a man-made disaster originating from the Financial Services Commission and the Financial Supervisory Service.]

[Lee Chan-jin / Governor of the Financial Supervisory Service: We are taking this matter very seriously.]

Even within the Democratic Party, pointed remarks emerged that responsibility for amplifying stock market volatility cannot be avoided.

[Kim Yong-man / Democratic Party Lawmaker: I think it is not unreasonable to view that this (leveraged ETF) is causing volatility right now; do you agree?]

Voices also called for hurriedly preparing countermeasures, such as adjusting the leverage ratio currently set at 2x and allowing only professional investors to make new purchases.

[Kim Hyun-jung / Democratic Party Lawmaker: (The ratio) is currently 2x, right?]

[Lee Eok-won / Chairman of the Financial Services Commission: (Lowering the ratio) seems like it would be effective in terms of mitigating volatility.]

Financial Services Commission Chairman Lee Eok-won and Financial Supervisory Service Governor Lee Chan-jin expressed their intent to apologize, stating, "We take the expanded volatility very seriously."

(Photo: Yonhap News)

Reported by Lee Seung-hwan and Shin Dong-hwan | Video by Lee Seung-hee | Graphics by Park Tae-young
※ Please note: This article was translated by AI and may contain errors.