South Korea's central bank warns Samsung and SK Hynix leveraged ETFs may aggravate market volatility

According to South Korean media reports, the Bank of Korea warned that the single equity leveraged trading ETF linked to Samsung Electronics and SK Hynix may further intensify market concentration, amplify market volatility, and strengthen unilateral trading capital flows. "Given that Samsung Electronics and SK Hynix account for more than half of the total market value and turnover of the South Korean stock market, expanding the scale of single stock leveraged ETF investment may further increase market concentration," the Bank of Korea said in a written response submitted to National Power Party MP Park Sung-hoon. The Bank of Korea said that as corporate operating conditions or market expectations change, capital inflows and outflows increase, and such products may amplify unilateral transactions. In addition, once the market correction occurs, losses for retail investors may widen further, and increased ETF redemptions or portfolio rebalancing may also exacerbate fluctuations in relevant stock prices. According to Yonhap News Agency, the Bank of Korea plans to strengthen monitoring of the impact of a single stock-leveraged ETF on the stock market and financial system.