As Korea's stock market swung between hot and cold, the Financial Supervisory Service has issued consumer alerts roughly once every 10 days so far this year. That is on par with 2024, when the most alerts were issued in a year. With market instability growing amid the introduction of leveraged exchange-traded funds (ETFs), the FSS appears to have increased the number of alerts as it shifted to a policy of proactively signaling early risk signs.
According to the financial authorities on the 4th, the Financial Supervisory Service issued a total of 23 consumer alerts over the 215 days from Jan. 1 to on the 3rd. If the current trend continues, the number of alerts this year is expected to surpass 2024's record high of 38.
Consumer alerts were introduced in 2012 to prevent damage from financial fraud such as voice phishing. When consumer harm has occurred or is likely to spread due to financial products or illegal financial activity, alerts are issued in stages of caution, warning, and danger.
This year's alerts span from financial investment to lending, cards, and insurance. Alerts related to financial fraud such as voice phishing were the most frequent at 10, followed by five investment-related alerts including stocks and exchange-traded funds (ETFs), three for insurance, and two for loans. That contrasts with last year, when 17 out of 28 alerts (60%) focused on financial fraud.
A hallmark of the investment-related alerts is the increase in ETF-related cases. Representative examples include alerts on single-stock leveraged and inverse ETFs (No. 17) and bank ETF trust transactions (No. 23). As funds poured into high-risk products such as single-stock leveraged ETFs that track Samsung Electronics and SK hynix shares at twice the pace on the back of a semiconductor boom, market volatility increased, prompting the financial authorities to issue related alerts out of concern for investor losses.
The KOSPI index plunged more than 20% in on the last month, and there were 33 days this year when the KOSPI moved 5% or more in a day. Over the same period, the Nikkei 225 did so on four days, while the Hang Seng Index had none. The introduction of leveraged ETFs and net selling by foreign institutional investors are cited as drivers of the heightened market volatility.
An FSS official said, "In the past, we often issued alerts after the damage had grown, but now the number of consumer alerts has increased as we operate in a way that informs the public first when even small risk signals are detected."