- KOSPI index dropped as much as 12.6 percent before trimming some losses to close down 6 percent, extending Tuesday’s near-11 percent rout.
- South Korean Finance Minister Koo Yun-cheol apologised for the introduction of single-stock leveraged exchange-traded funds, or ETFs, saying they had not been considered carefully enough.
- The government is reviewing market stabilisation measures, including regulation of the funds, which some analysts have blamed for increasing the amount of leveraged trading in Seoul’s market.
- The Ministry of Finance said it would immediately pursue further curbs on single-stock leveraged products, including individual investment limits — citing a cap of up to 20 percent of an investor’s total investment amount as an example.
South Korean stocks have lost about $2.18 trillion in value as the KOSPI index faced a significant downturn, dropping 6 percent amid regulatory scrutiny over leveraged ETFs.1
The index initially fell as much as 12.6 percent before closing down 6 percent, extending a near-11 percent drop from the previous day.
Finance Minister Koo Yun-cheol, under pressure from lawmakers, apologised for the introduction of single-stock leveraged ETFs, acknowledging that they had not been adequately considered.2
The government is now reviewing market stabilisation measures, including potential regulations on these funds, which analysts believe have contributed to increased leveraged trading in Seoul's market.3
The Ministry of Finance announced plans to impose individual investment limits on single-stock leveraged products, suggesting a cap of up to 20 percent of an investor's total investment amount, along with higher trading costs to deter excessive activity.4
“The KOSPI index has lost about $2.18 trillion in value over two sessions, with Finance Minister Koo Yun-cheol apologizing for the rushed introduction of single-stock leveraged ETFs. The Ministry of Finance is now pursuing curbs on these products, including a proposed cap of 20 percent on individual investments.”
