Chairperson Lee Eog-weon of the Financial Services Commission said he will announce supplementary measures soon regarding single-stock leveraged exchange-traded funds (ETFs), which have been cited as a cause of the recent increase in volatility in the domestic stock market.
Appearing on the YouTube program "Kim Ou-joon's Humility Is Hard News Factory" on the 16th, the chairperson, when asked whether single-stock leveraged products have affected recent market volatility, said, "It seems the question is to what extent that part has an impact," adding, "We are closely reviewing and considering those aspects as well, and we will swiftly prepare supplementary measures and announce them soon."
On whether a temporary trading halt is being considered, the response was, "The market is the market (a domain), and doing so could cause greater side effects, so we are looking at it comprehensively." However, there was no specific mention of whether such a measure would be included in the plan.
The chairperson cited the global semiconductor industry as the backdrop to the recent expansion in market volatility. "The semiconductor industry has grown rapidly in a supercycle and share prices have risen a lot in a short period, and expectations and concerns about this are crossing daily and swinging whenever news comes out," the chairperson said, adding, "Not only Samsung Electronics and SK hynix but also Micron and Kioxia and other global semiconductor stocks are continuing to swing."
As for why the domestic market is being hit harder than overseas, the chairperson pointed to the increased weight of semiconductors. "The KOSPI market cap weight of Samsung Electronics and SK hynix rose from 22% at the end of June last year to 30% at the end of last year, and now to 52%–53%, and if you add related stocks such as SK Square and Samsung C&T, it reaches 60%," the chairperson said. "In the past, even if it swung, the area taking the hit was 22% or 30%, but now that 60% is taking the hit, the area receiving the shock has grown."
The chairperson repeatedly emphasized that single-stock leveraged products are short-term high-risk products. The chairperson said that to ease market volatility, it is important to induce inflows of long-term funds and diversification, while creating conditions for long-term investment by strengthening industrial competitiveness and enhancing shareholder value.
Regarding criticism directed at the financial authorities, the chairperson said, "We are the ultimate responsible party for the financial market, so we must, of course, bear all related criticism," adding, "The Ministry of Economy and Finance, the Bank of Korea, the Financial Supervisory Service, and the Financial Services Commission are in close consultation among the relevant ministries."