South Korea Halts New Single-Stock Leveraged ETF Launches

Deep News07-16 22:11

South Korean regulatory policy has taken a turn. This past May, authorities had just approved the listing of leveraged exchange-traded funds (ETFs) linked to single stocks like Samsung Electronics Co Ltd and SK Hynix Inc. These products have been heavily criticized for potentially exacerbating market volatility, and regulators have now introduced new rules to rein them in.

The reform measures include a ban on new applications for similar products and an increase in the minimum cash investment threshold for investors.

Influenced by the Bank of Korea's first interest rate hike since January 2023, the KOSPI index plummeted 6.4% on Thursday, officially entering bear market territory.

So far this year, the KOSPI has experienced 27 trading sessions with single-day price swings exceeding 5%.

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