SEOUL — South Korea’s leading financial watchdog announced Tuesday that it is weighing restrictions on how much individual investors can put into single-stock leveraged exchange-traded funds, according to local media reports.
Lee Eog-weon, chairman of the Financial Services Commission, addressed a gathering of local brokerages and asset managers in Seoul, stating that the regulator plans to examine and develop further steps to cool demand for these investment products. Among the options being considered is placing a ceiling on the total amount any single investor could hold in these funds.
Just last week, the Korean regulator had already moved to tighten access to these ETFs by increasing the cash deposit required for retail investors to participate. The funds in question are primarily tied to the country’s two largest stocks and semiconductor manufacturers — Samsung Electronics and SK Hynix.
On Tuesday, Samsung Electronics shares fell as much as 9.7% on the Seoul market, driven by fears that the Korean memory chip producer could lose ground to Chinese competitor CXMT, as well as concerns about financing risks connected to artificial intelligence infrastructure spending.
SK Hynix, which recently listed its American Depositary Receipts in the United States, saw its Seoul-traded shares drop as much as 11.2% on the same day. Its ADR had already declined 10% on the Nasdaq on Monday, falling below its initial public offering price.
