South Korea Weighs Restricting 2x Single-Stock ETFs After Retail Investors Pour In 14 Trillion Won
Updated
Updated · CNBC · Jul 29
South Korea Weighs Restricting 2x Single-Stock ETFs After Retail Investors Pour In 14 Trillion Won
3 articles · Updated · CNBC · Jul 29
Summary
South Korea’s regulator is considering limiting single-stock leveraged ETFs to professional investors and potentially cutting their 2x leverage after sharp retail losses.
14 trillion won ($9.7 billion) of net retail buying flooded into the products after their May 27 launch, but chip-linked funds then collapsed as the Kospi corrected and semiconductor shares slid.
The KODEX SK Hynix Single Stock Leverage ETF has dropped more than 80% from its June 23 peak, while the Samsung equivalent is down almost 75% from its June 3 high.
Finance Minister Koo Yun-cheol apologized in parliament, saying the products were introduced without careful consideration, as lawmakers pressed officials over the fallout.
The debate marks a sharp turn for one of the world’s hottest equity markets, where a chip-driven rally has reversed and the Kospi has fallen nearly 35% over the past month.