South Korea’s Single‑Stock Leveraged ETFs Under Scrutiny

Asset‑manager Baek Jae‑gyu, known as the “ETF father,” warned investors not to buy Samsung Electronics and SK Hynix single‑stock leveraged ETFs, calling them a “time bomb” that has driven the KOSPI down more than 24% in a month. President Lee Jae‑myung cited the issue in a cabinet meeting, urging faster and stronger regulatory action, and suggesting a reduction in leverage multiples or even delisting the products.

Future Asset Management’s ETF head Jeong Ui‑hyun pushed back, saying the view that these leveraged ETFs are the main source of recent market volatility is overstated. He noted that rebalancing can marginally affect prices but that the overall trading volume of the ETFs (about 4.9 trillion won in assets) is far below the daily turnover of Samsung shares (5.8 trillion won), limiting any market‑moving power. Jeong highlighted the products’ benefits, such as providing retail investors with a standardized derivative and enhancing liquidity, while warning that they remain risky and suitable only for knowledgeable investors.