Lee Urges Swift Action as Leveraged ETFs Rattle Korean Stocks

South Korea opened its market to the first single-stock leveraged products on May 27, when eight asset managers launched 16 ETFs and a securities firm introduced two ETNs tied to Samsung Electronics and SK hynix. Designed to deliver plus or minus twice the stocks’ daily moves, the products can magnify losses through concentrated exposure and daily rebalancing. Their popularity during the AI-chip rally has tested Seoul’s investor safeguards and contributed to broader market volatility.

President Lee Jae Myung told financial regulators at a July 21 cabinet meeting to take necessary action swiftly. The Financial Services Commission had already suspended new listings on July 16 and raised the minimum deposit to 30 million won ($20,000) in cash, from 10 million won previously permitted in cash and shares. The KOSPI was down 28% by the morning of July 21 from its June 19 record of 9,385, intensifying pressure on the Financial Supervisory Service to contain risks.