Regulatory concerns over single-stock leveraged ETFs may trigger new restrictions, amplifying volatility in Korea’s largest tech stocks.
The Bank of Korea warned that leveraged ETFs tied to Samsung Electronics and SK Hynix could deepen market concentration and amplify intraday volatility. The two stocks account for 55.3% of the KOSPI’s market capitalization and 63.5% of its trading value, magnifying risks from daily rebalancing flows.
The central bank’s shift from a more optimistic stance just ten days earlier suggests policymakers are reacting to rapid market changes. These ETFs structurally magnify price swings, potentially widening retail investor losses during downturns.
Authorities may introduce new barriers or eligibility restrictions, which could reduce rebalancing-driven flows and stabilize trading in both stocks.