South Korea's Regulatory Measures May Not Curb Market Volatility Amid $2 Trillion Stock Loss
South Korean regulators have introduced new measures to limit individual investments in single-stock leveraged funds and increase trading costs for these ETFs, aiming to reduce market volatility. However, analysts argue that the rules do not address the scale of leverage used by such products or effectively mitigate their influence during sharp price swings. The KOSPI has fallen nearly 40% over a month, erasing $2 trillion in value and disproportionately affecting retail investors who borrowed money to invest late into the market. Public frustration is growing, with condolence flowers placed outside parliament as citizens protest government handling of leveraged products. Finance Minister Koo Yun-cheol apologized for introducing these funds without sufficient caution. Despite some stabilization on Thursday following two days of heavy losses, analysts remain skeptical about the effectiveness of current measures compared to stricter actions taken in Hong Kong. The market is expected to record its largest monthly decline ever.
Topics: government intervention leveraged ETFs stock market crash volatility