South Korea's FSC Rules Out Leverage ETF as Primary Driver of Market Volatility, Cites Global Chip Industry

On July 16, South Korean Financial Services Commission Chairman Lee Euk-won rejected claims that single-stock leverage ETFs are the main cause of increased stock market volatility, instead attributing fluctuations to global semiconductor industry dynamics and structural factors. During a YouTube interview, Lee noted that semiconductor stocks now account for approximately 53% of KOSPI market capitalization, up from 22% last June, with related stocks bringing total exposure to around 60%. He acknowledged leverage ETF effects require evaluation but emphasized that "higher expectations and concerns are crossing every day" due to rapid semiconductor super-cycle growth and daily news-driven swings. The FSC chief said supplements to address leverage ETF concerns will be announced "soon" but ruled out temporary trading halts, citing potential adverse effects. The government is coordinating across multiple agencies to develop comprehensive measures.
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