Leveraged Semiconductor ETFs Prompt South Korea Market Review

South Korea’s financial regulator is considering measures to reduce market volatility after leveraged semiconductor ETFs contributed to sharp increases in speculative trading activity.

Financial Supervisory Service Governor Lee Chan-jin said authorities were reviewing possible stabilisation measures and acknowledged that the recent introduction of the products may have been rushed.

The leveraged semiconductor ETFs are linked to shares of Samsung Electronics and SK Hynix, two companies at the centre of the global artificial intelligence-driven semiconductor boom.

Regulators recently issued warnings about the products after retail borrowing for stock investments surged to a record KRW60tr (USD39bn) by the end of May.

South Korea’s benchmark KOSPI index has climbed more than 110% this year, supported by strong investor enthusiasm for AI-related chipmakers.

Lee said authorities remain focused on ensuring market stability and investor protection while monitoring developments in the rapidly expanding ETF market.

He also noted that South Korea is not rushing efforts to secure developed-market status from MSCI, despite ongoing market reforms.