Kim Yong-beom, the Blue House policy chief, on the 28th local time addressed the expansion of volatility in Korea's stock market due to single-stock leveraged exchange-traded funds (ETFs), saying, "The artificial intelligence (AI) revolution is real. The market and investors are still less certain about the situation in which the AI revolution is unfolding." While single-stock leveraged ETFs have recently been cited as the main cause of heightened market volatility, it ultimately means the market's unease over whether there will be a long AI boom is being reflected.
Accompanying President Lee Jae-myung on a state visit to Brazil, the Deputy Minister announced the results of the Korea-Brazil Business Roundtable held in São Paulo on the day and, when asked about measures related to the domestic stock market situation, answered, "Debate continues over the overall course of semiconductor and AI stocks. As I said, the debate is whether this cycle is eternal or not."
He added, "I do not think actual demand or the uses of AI are temporary. I believe demand will remain solid," and said, "(The current volatility) is a process of finding an equilibrium." On the single-stock leveraged ETF system, he said, "The moving volatility is quite concerning from investors' point of view," and added, "The Financial Services Commission and the Financial Supervisory Service plan to review not only leveraged ETFs but the market overall for structural factors that make volatility stand out."
He also noted the impact of the China-led "semiconductor shock." After Changxin Memory Technologies (CXMT), the world's No. 4 DRAM maker known as "China's Samsung and SK hynix," listed on the Shanghai Stock Exchange, and as a Chinese corporation began manufacturing deep ultraviolet (DUV) lithography equipment, a core semiconductor production tool, the KOSPI fell more than 10% from the previous trading day.
Referring to this situation, the Deputy Minister said, "It is not just our (stock market) over the past two or three months. Debate continues over the overall course of semiconductor and AI stocks." He said, "With CXMT listing and lithography added, it looks like the old 'DeepSeek shock.' From China's perspective, they will try to nurture the two companies with a long-term horizon, and given China's strengths in technology and such aspects, one could think it appears to be making strides."
He went on, "Rather, seeing this shock, I read that we must build fabs and invest in a timely manner, or focus even more on research and development (R&D)." As China's memory semiconductor technology chases the Korean market, this means Samsung Electronics and SK hynix should sharply expand capital expenditures and research and development. It also underscores the need for the government's "three mega projects," totaling 4,700 trillion won, to be pushed through investments by these corporations.