Bank of Korea warns that leveraged ETFs on Samsung and SK Hynix may increase market volatility.

robot
Abstract generation in progress

BlockBeats news, July 5, according to Korean media reports, the Bank of Korea warned that single-stock leveraged ETFs linked to Samsung Electronics and SK Hynix could further exacerbate market concentration, amplify market volatility, and strengthen one-sided trading capital flows.

The Bank of Korea stated in a written response submitted to People Power Party lawmaker Park Sung-hoon: "Given that Samsung Electronics and SK Hynix account for more than half of the total market capitalization and trading volume of the Korean stock market, expanding the scale of investment in single-stock leveraged ETFs could further intensify market concentration." The Bank of Korea said that as corporate operating conditions or market expectations change, the inflow and outflow of funds increase, and such products could amplify one-sided trading.

In addition, once the market experiences a correction, retail investors' losses could further expand. Increased ETF redemptions or portfolio rebalancing could also exacerbate price volatility in related stocks. According to Yonhap News, the Bank of Korea plans to strengthen monitoring of the impact of single-stock leveraged ETFs on the stock market and financial system.

View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments
  • Pinned