Svmuu News: The Bank of Korea disclosed in a written document submitted to the National Assembly that the rapid expansion of single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix may be amplifying structural “herding” and volatility risks in the South Korean stock market. The combined market capitalization and trading volume share of the two companies in the South Korean stock market have risen significantly, with their market capitalization share increasing from approximately 36.1% at the end of last year to over 55% recently, and their trading volume share jumping from 27.9% to 63.5%.
South Korean financial regulators have also expressed similar concerns, emphasizing the need to continuously monitor the potential impact of such products on market stability and systemic risk. Single-stock leveraged ETFs may exacerbate one-way capital flows amid shifts in market sentiment; should the market reverse, combined with intraday rebalancing and derivative hedging mechanisms, this could further amplify price volatility. (Etoday)