President Lee Jae-myung on July 21 directed financial authorities to swiftly prepare supplementary measures for the single-stock leverage ETF system, citing increased market instability concerns. Speaking at a cabinet meeting, President Lee acknowledged that the system has become a source of investor complaints, noting it amplifies market movements in both rising and falling phases. The directive addresses Samsung Electronics and SK Hynix single-stock leverage ETFs introduced to stabilize foreign exchange markets, with authorities defending the policy's effectiveness in reducing overseas capital outflows despite investor criticism of market volatility effects.
President Lee Directs Swift Action on Single-Stock Leverage ETF Concerns
President Lee instructed authorities to prepare supplementary measures swiftly and pursue additional measures if necessary. At the cabinet meeting, he stated, "The problem is that this has certainly become one cause of domestic investors' dissatisfaction." President Lee questioned whether the system helped stabilize the foreign exchange market as originally intended, pointing out that "this intensifies the rise in an upward phase and deepens the fall in a downward phase."
The President emphasized that while authorities made efforts, market participants view the policy inefficiencies and problems as far greater than the intended foreign exchange stabilization effects. He stated, "Supplementary measures must be made swiftly and thoroughly."
Financial Authorities Defend Foreign Exchange Stabilization Effects
FSC Chairman Lee Eok-won explained that Hong Kong product scale decreased from approximately 20 trillion won to 17 trillion won recently, with domestic investment portions also declining. He stated, "If this system had not existed, more funds might have gone overseas."
Policy Director Kim Yong-beom emphasized foreign currency outflow suppression effects. Kim stated, "Last year individuals had net outflows of $40 billion through overseas securities investment, but in the first half of this year it was only $2.8 billion." He added, "Individuals' overseas fund net outflows have dramatically decreased, and we believe these effects also played a part."
President Questions Adequacy of August 5 Deposit Requirement
President Lee questioned whether recently announced supplementary measures are sufficient, asking Chairman Lee, "Won't that be enough? That's the criticism." When Chairman Lee explained that the 30 million won investor deposit system implementation was moved up to August 5 as early as possible, President Lee responded, "The implementation itself isn't immediate or early but has to wait quite a while." He added, "Market participants' demand is that such things should have been anticipated in advance."
President Lee instructed, "Of course it's difficult for policy authorities to do it perfectly, but anyway, respond swiftly and boldly with necessary measures." He requested authorities to continue monitoring market impact and prepare additional measures if necessary.
President Lee acknowledged, "It happened to be introduced at the peak during a sharp rise phase, so there seems to be an aspect of creating an optical illusion as if problems are serious because of this." He added, "Policy is always difficult in many ways. If you defend this side, problems arise on that side; if you do that, problems arise here." He concluded, "It's a very difficult situation, but let's handle it wisely."
FAQ
What did President Lee Jae-myung direct regarding single-stock leverage ETFs on July 21?
President Lee directed financial authorities to swiftly prepare supplementary measures for the single-stock leverage ETF system and pursue additional measures if necessary. He made this directive at a cabinet meeting, citing increased market instability concerns and investor complaints.
Why did President Lee criticize the single-stock leverage ETF system?
President Lee stated the system has become a source of domestic investor dissatisfaction because it intensifies market movements in both directions — amplifying rises in upward phases and deepening falls in downward phases. He acknowledged that while authorities intended to stabilize foreign exchange markets, market participants view the policy's inefficiencies and problems as far greater than its intended effects.
When will the 30 million won investor deposit requirement be implemented?
The 30 million won investor deposit system is scheduled for implementation on August 5. FSC Chairman Lee Eok-won stated this date was moved up as early as possible, though President Lee questioned whether the timeline was sufficiently swift in response to market concerns.
