business
South Korea single-stock leveraged ETFs double in size as regulator reviews investor protections
Lee Chan-jin said single-stock leveraged ETFs tied to Samsung Electronics and SK hynix have shown extreme turnover since their late-May launch. The Financial Supervisory Service is preparing measures to shield investors from potential losses.
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Lee Chan-jin, governor of the Financial Supervisory Service, said Monday that single-stock leveraged ETFs have produced many side effects and that the agency is preparing measures to protect investors. The products, which track Samsung Electronics and SK hynix, were introduced in late May.
Lee said their turnover has been extreme since launch and expressed concern that only management entities are profiting while investors see little gain.
Market capitalization of the ETFs rose from 4.5 trillion won on May 27 to 9.6 trillion won on June 12, Yonhap reported. Their daily turnover rate reached 122.5 percent, compared with 30.2 percent for other leveraged and inverse ETFs. The underlying shares have experienced heightened volatility amid an artificial-intelligence rally, which the FSS said could further amplify swings in the ETFs.
The agency is reviewing steps to limit adverse effects on investors.
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