The government decided to push measures such as setting individual investment limits on single-stock leveraged products as a response to the sharp drop in stock prices.
Koo Yun-cheol, Deputy Prime Minister and Minister, held an emergency joint market situation review meeting with Bank of Korea Governor Shin Hyun-song, Financial Services Commission (FSC) Chair Lee Eog-weon, Financial Supervisory Service Governor Lee Chan-jin, and Senior Secretary for Economic Growth Ha Jun-kyung at Government Complex Seoul on the 29th. The meeting discussed measures including setting individual investment limits on single-stock leveraged products, an excessive quote expense levy system, and adjustments to leverage multiples.
The government plans to manage investment size by setting individual investment limits on single-stock leveraged products. As an example, it presented capping the share of single-stock leveraged products at within 20% of an individual's total investment amount. The specific limit has not yet been finalized.
The government also decided to raise transaction cost burdens to curb excessive trading behavior. It is considering applying the "excessive quote expense levy," which imposes a cost when orders above a certain level are repeatedly submitted in the futures market, to single-stock leveraged products as well.
Alongside this, the government plans to establish a legal basis for the financial authorities to adjust leverage multiples to stabilize the market. Hong Kong operates a "variable leverage" system that adjusts product leverage based on market conditions. The government plans to use this as a reference to create a system that allows the authorities to take market stabilization steps in emergencies.
Meanwhile, the government cited intensified China-led competition in memory semiconductors and concerns about funding by U.S. big tech corporations as reasons behind the recent stock slide. It also viewed investor sentiment as having weakened during a correction after stock prices had risen steeply.
The government, however, said excessive anxiety about the domestic stock market should be avoided. It noted that exports of key items such as semiconductors continue to perform well, corporate earnings forecasts have been revised upward, and the current account surplus is also expanding.