South Korea's central bank warns: Single-leveraged ETFs tracking Samsung Electronics and SK Hynix may amplify stock market risks.

Jinse Finance reports that on July 5, the Bank of Korea disclosed in a written document submitted to the National Assembly that the rapid expansion of single-stock leveraged ETFs targeting Samsung Electronics and SK Hynix may be amplifying the structural "herding" and volatility risks in the Korean stock market. The combined market capitalization and trading volume of the two companies in the Korean stock market have risen sharply, with market cap share increasing from about 36.1% at the end of last year to over 55% recently, and trading volume share jumping from 27.9% to 63.5%.

South Korea's financial regulatory authorities have also expressed similar concerns, emphasizing the need to continuously monitor the potential impact of such products on market stability and systemic risk. Single-stock leveraged ETFs may exacerbate one-way capital flows under changing market sentiment, and once the trend reverses, combined with intraday rebalancing and derivatives hedging mechanisms, price volatility could be further amplified.