The South Korean Financial Services Commission responds to controversy: Single-stock leveraged ETFs are not to blame for stock market volatility.
According to Odaily and Yonhap News Agency, the Financial Services Commission (FSC) of South Korea stated that single-stock leveraged ETFs have played a significant role in preventing capital outflow to overseas stock markets. The FSC also pointed out that the volatility of US and Japanese semiconductor stocks has recently increased significantly and responded to the controversy regarding whether single-stock leveraged ETFs are the "culprit" for the recent surge in volatility in the South Korean stock market.
Byun Je-ho, Director of the Capital Market Bureau at the FSC, said: "Some investment demand that was originally flowing abroad has returned to the domestic market, and it has indeed been effective in preventing new funds from moving overseas." He added: "I believe that the intensified volatility in the South Korean stock market since the launch of the product cannot be explained solely by single-stock leveraged ETFs. Given the high concentration of capital in Samsung Electronics and SK Hynix in the Korean market, repeated optimism and concern about the global semiconductor industry are the true reasons for the increased volatility of related products." (Golden Ten Data)
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