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In the news again - South Korea eyes curbs on leveraged ETFs as investor losses mount
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-South Korea is considering tighter rules on single-stock leveraged ETFs after retail investors piled into Samsung and SK Hynix-linked products near their peak and were hit with steep losses.
Summary:South Korean financial authorities are weighing tighter curbs on high-risk leveraged ETFs as part of broader efforts to stabilise the country's volatile stock market.
Proposals under consideration include giving regulators power to reduce the leverage ratio of single-stock ETFs and raising minimum investment requirements to discourage inexperienced retail investors from taking excessive risk.
Single-stock leveraged ETFs let investors amplify exposure to a single company's share price without owning the underlying stock, typically targeting twice the stock's daily return.
Many retail investors who bought leveraged ETFs linked to Samsung Electronics and SK Hynix near their peak have suffered steep losses after the shares tumbled from record highs reached in June.