South Korea has temporarily suspended the issuance of leveraged equity ETFs in an effort to control market volatility.

South Korea has temporarily suspended the issuance of leveraged equity ETFs and increased the minimum investment amount, following the popularity of funds linked to Samsung Electronics and SK Hynix, which are seen as accelerating volatility in the stock market.

On July 16, 2569 at 14.20:XNUMX p.m., Bloomberg News reported that The Financial Services Commission of Korea (FSC) The listing of leveraged Exchange Traded Funds (ETFs) referencing individual stocks has been temporarily suspended to curb increased volatility in the stock market.

FSC specify that These measures will remain in effect until market conditions return to normal. Additionally, the minimum investment for leveraged ETF purchases has been increased from 10 million won to 30 million won, or approximately US$20,300, effective August 5th.

This decision comes after discussions between regulatory agencies, the Ministry of Finance, and the Bank of Korea, amid calls for the government to take measures to reduce volatility in the South Korean stock market, which has a total value of approximately US$4.1 trillion and has become one of the most volatile stock markets in the world in recent years.

One of the factors being watched closely. คือ The launch of more than ten leveraged equity ETFs about two months ago. This is designed to generate a return of double the daily movement of Samsung Electronics and SK Hynix stocks.

Many market participants view these funds as accelerating stock price volatility, as fund managers must buy or sell large numbers of stocks daily to rebalance their portfolios and maintain their target leverage levels, resulting in a significant increase in both buying and selling pressure in the market.

These latest measures reflect South Korean authorities' efforts to control risks from complex investment products and maintain capital market stability, following severe volatility driven by speculation in technology and semiconductor stocks in recent months.

refer : www.bloomberg.com

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