The Bank of Korea warns that leveraged ETFs for Samsung and SK Hynix may exacerbate market volatility.

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ME News report, July 5 (UTC+8), 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. In a written response submitted to Park Sung-hoon, a lawmaker of the People Power Party, the Bank of Korea stated: "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 may further increase market concentration." The Bank of Korea said that as changes occur in corporate operating conditions or market expectations, capital inflows and outflows increase, and such products may amplify one-sided trading. Furthermore, once a market correction occurs, losses for retail investors may further expand, while increased ETF redemptions or portfolio rebalancing may also exacerbate price volatility of related stocks. The Bank of Korea plans to strengthen monitoring of the impact of single-stock leveraged ETFs on the stock market and the financial system. (Source: ChainCatcher)
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