South Korea's Finance Minister Apologizes to Investors After Chip-Stock Leveraged ETFs Trigger Market Plunge

Price Action Impact 4
โดย Money & Banking·Read original
Summary · why it matters

South Korea's Finance Minister, Koo Yun-cheol, issued a public apology after the KOSPI index fell more than 30 percent in a single month, with retail investors suffering heavy losses from single-stock leveraged ETFs launched just last May. Net purchases of these products totaled 14 trillion won, or roughly 9.6 billion US dollars, amid a surge in chip stocks like Samsung Electronics and SK Hynix, which together account for more than half of the KOSPI index and on some days represented over 80 percent of trading value. The daily rebalancing mechanism of these leveraged funds created a feedback loop that accelerated sharp rises and rapid declines in stock prices, pushing the KOSPI Volatility Index up nearly 100 points from its normal level below 30.

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