The Bank of Korea Warns Samsung and SK Hynix Leveraged ETFs Could Worsen Market Volatility
BlockBeats News, July 5th, according to Korean media, the Bank of Korea has warned that a single-stock leveraged ETF linked to Samsung Electronics and SK Hynix could further exacerbate market concentration, amplify market volatility, and strengthen one-way trading fund flows.
The Bank of Korea stated in a written reply to National Forces Party lawmaker Park Sung-hoon: "Considering that Samsung Electronics and SK Hynix account for more than half of the total market capitalization and trading volume of the Korean stock market, expanding the scale of single-stock leveraged ETF investments could further exacerbate market concentration." The Bank of Korea indicated that as fund flows increase due to changes in corporate performance or market expectations, such products could amplify one-way trading.
Furthermore, once the market experiences a pullback, losses for retail investors could be further magnified, and ETF redemptions or portfolio rebalancing could also exacerbate related stock price fluctuations. According to Yonhap News Agency, the Bank of Korea plans to enhance monitoring of the impact of single-stock leveraged ETFs on the stock market and the financial system.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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