People Power Party leader Jang Dong-hyuk on the 7th day criticized single-stock leveraged exchange-traded funds (ETFs) for increasing volatility in South Korea's stock market, demanding an audit of the Blue House that directed their approval. Jang stated KOSPI triggered its 16th sell-side circuit breaker this year and last month's KOSPI 'fear index' averaged 85.42. The Financial Supervisory Service chief had expressed regret for not blocking these products, which Jang described as inappropriate for South Korea's smaller market environment.
KOSPI Triggered 16 Circuit Breakers Amid ETF Volatility
Jang Dong-hyuk wrote on Facebook that KOSPI plunged again, triggering the 16th sell-side circuit breaker this year. He stated last month's KOSPI 'fear index' recorded a monthly average of 85.42. Jang identified single-stock leveraged ETFs as the primary cause, referencing the FSS chief's statement: "I should have blocked it even if I had to lie down." Jang characterized these products as items that should never have been introduced domestically.
Jang explained that allowing single-stock ETFs in South Korea's smaller market environment naturally concentrates capital flows. He described the situation as "releasing sharks into a small pond," resulting in severe market disruption, increased volatility, and retail investors attracted to volatility turning the stock market into a gambling arena.
Blue House Policy Chief Directed Single-Stock ETF Approval
Jang attributed the approval to Blue House policy chief Kim Yong-beom, quoting his directive from earlier this year: "Why can't we allow domestically what is possible on NASDAQ? I instructed the Financial Services Commission to review it." Jang stated President Lee Jae-myung ordered this directive. Jang characterized the instruction as permitting NASDAQ-style leveraged investing, which some Korean investors conducted with aggressive risk tolerance, to be allowed in the domestic market without proper review of side effects. Jang stated officials did not scrutinize consequences because the president ordered it, resulting in what he termed "KOSPI casino."
Board of Audit Launches Financial Regulator Investigation
The Board of Audit and Inspection began an audit of the Financial Services Commission and Financial Supervisory Service to examine financial investor protection practices. Jang stated that genuine auditing requires starting with the Blue House that issued the directive. He demanded President Lee Jae-myung be included as an audit subject, asserting Kim Yong-beom could not have acted alone. Jang emphasized legal accountability must be established for this incident that caused enormous damage to the majority of citizens.
Opposition Leader Demands Presidential Accountability
Jang criticized President Lee Jae-myung, stating he already faces trials for accumulated crimes while new criminal allegations emerge daily. Jang suggested this explains the president's desire to cancel trials, amend the constitution, and seek re-election. Jang concluded that increased struggling only shortens the administration's lifespan.
FAQ
What did Jang Dong-hyuk criticize on the 7th day?
Jang Dong-hyuk criticized single-stock leveraged ETFs for increasing South Korea's stock market volatility and demanded an audit of the Blue House that directed their approval.
How many circuit breakers did KOSPI trigger this year?
KOSPI triggered its 16th sell-side circuit breaker this year, according to Jang Dong-hyuk's statement on the 7th day.
Who directed the approval of single-stock leveraged ETFs?
Blue House policy chief Kim Yong-beom directed the Financial Services Commission to review allowing single-stock leveraged ETFs earlier this year, according to Jang Dong-hyuk.
