Kim Yong-beom: "Stock Market Volatility, Including Leveraged ETFs, Needs a Broad Review of Structural Factors"

 [Financial News, São Paulo, Brazil = Reporter Choi Jong-geun]Kim Yong-beom, Chief Presidential Secretary for Policy at Cheong Wa Dae, said that in response to the recent plunge in the domestic stock market, the government will review the structural factors behind unusually high volatility more broadly, not just single-stock leveraged exchange-traded funds (ETFs), together with the Financial Services Commission (FSC) and the Financial Supervisory Service.
Kim made the remarks on the 28th local time at a briefing on the results of the Korea-Brazil business roundtable held at a press center in São Paulo, Brazil, in response to reporters' questions about measures to stabilize the stock market.
He said the recent market turbulence stemmed from uncertainty over the profitability of the artificial intelligence (AI) industry and the sustainability of semiconductor demand.
“The AI revolution is real, and no one is questioning that now,” Kim said. “But the market and investors still lack full confidence in how this revolution is unfolding.”
He added, “I think the market is having an internal debate right now. The past two or three months have not been unique to us. The debate over the future of semiconductors and AI stocks has been continuing.”
Kim said, “I do not think actual demand or the use cases for AI are temporary. I believe demand will remain solid,” adding, “I see this as a process of finding a balance.”
Regarding claims that leveraged ETFs were a major cause of the recent market slump, he said, “It is not all about leveraged ETFs,” and added that “the distribution market and structural characteristics of Korea's capital market also tend to amplify volatility.”
He also pointed to new variables such as the Shanghai Stock Exchange listing of China's semiconductor maker ChangXin Memory Technologies (CXMT), saying, “It feels like the old DeepSeek shock to me.” He added, “Seeing this shock only reinforces my view that we need to build fabs, invest at the right time, and stay much more focused on R&D.”
Meanwhile, the KOSPI closed at 6,023.66 on the day, down 10.84 percent from the previous session. Some analysts also said the 465 percent surge in CXMT's stock price on its first day of trading had a negative impact on supply and demand for domestic semiconductor companies.
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