President Yoon Admits Policy Design Flaw in Single-Stock Leverage ETF Introduction

President Yoon Suk Yeol admitted that protective measures for investors were inadequate when single-stock leverage exchange-traded funds (ETFs) were introduced, acknowledging gaps in policy design.

Speaking at a press conference at Cheong Wa Dae's Yeongbin Hall on the 18th, President Yoon stated he had not yet fully grasped the detailed procedures behind the decision but acknowledged that 'there were shortcomings in the policy.'

Single-stock leverage ETFs track twice the daily returns of specific stocks like Samsung Electronics and SK Hynix. The president explained that during a period when exchange rates rose significantly, domestic investors purchased similar products overseas through markets such as Hong Kong, leading to foreign currency outflows.

'The intention was to introduce such products domestically to reduce capital outflow by allowing investors to trade these leverage ETFs on local markets,' he said. 'From the perspective of stabilizing foreign exchange markets and activating domestic investment, this principle was fundamentally sound.'

However, the product's launch coincided with the tail end of a stock market rally, resulting in substantial investor losses. While initial buying pressure concentrated after launch, a subsequent market downturn led to investors experiencing losses twice the decline of the underlying assets.

The president noted that financial authorities have since implemented corrective measures, reducing risk factors significantly. He added that 'it is possible to criticize that protective measures should have been applied from the outset of product introduction.'

He concluded by emphasizing that while no one can predict whether stock prices will rise or fall, 'the government must ensure investors are fully informed about risks and equipped with adequate protection,' signaling further investigation into the circumstances surrounding the ETF's introduction.