"Delisting Samsung Electronics and SK hynix leveraged ETFs would be difficult"... Cautious even about cutting leverage to 1.5 times [Stock market volatility at a 'dangerous level']

Kim Yong-beom, chief of staff at the Blue House, said on the 19th that delisting the single-stock leveraged exchange-traded funds (ETFs) tied to Samsung Electronics and SK hynix would be difficult, adding that the impact on the market must be considered. He also said the government aims to make its first investment project in the United States, part of a $350 billion investment plan, a reality in August or September.
Appearing on KBS 1TV's Sunday Diagnosis Live that day, Kim described single-stock leveraged ETFs as "a product that has already been introduced." He added, "Investors are already putting money into it, and the product has already grown to more than 10 trillion won." He then asked, "If we were to delist it, wouldn't that itself deal a huge shock to the market?" and questioned how the resulting sell orders would be absorbed.
He also took a cautious stance on lowering the leverage ratio from the current 2 times to 1.5 times. Kim said, "A 1.5-times product would be a different product," adding that if such a product is needed, it should be discussed separately.
On the supplementary measures announced by the government on the 16th, he said they reflected much of the market's concerns. However, he said the product structure still needs further improvement because concentrated trading just before the market close can increase stock price volatility. Leveraged products adjust their tracking gap through trading before the close in order to follow twice the daily rise or fall of the underlying stock.
Kim noted that sell orders could pile up within a narrow time window during this process. "Do we really have to do it within 30 minutes? Couldn't we widen that period to about two hours?" he said. "We need to think about ways to minimize the impact this product has on the market at a specific time." He also explained that regulators, asset managers, and securities firms could further discuss using derivatives instead of spot trading.
He stressed that the U.S. investment project is moving forward according to schedule. Responding to criticism that progress is slower than Japan's, Kim said, "That's not the case." He explained that, unlike Japan, South Korea had to enact related legislation, establish the US Investment Corporation, and secure personnel. He added, "We understand that we are making the law, establishing the US Investment Corporation, hiring people, and moving along an appropriate schedule," and said the government is closely analyzing the list of investment projects provided by the U.S. side. Kim said, "We are preparing so that the first U.S. investment could become a reality within the next month or two." When asked for a specific timing, he replied, "It should happen in August or September."
west@fnnews.com Reporter Seong Seok-woo Reporter