Jang Dong-hyuk Says Single-Stock Leveraged ETFs Risk Making Market a ‘Black Everyday’

Jang Dong-hyuk, leader of the People Power Party, said July 9 that single-stock leveraged exchange-traded funds had amplified recent sharp volatility in South Korea’s stock market and blamed the government.

Speaking at a Supreme Council meeting at the National Assembly, Jang said he was concerned the market could turn into a “Black Everyday.” Stock prices are repeatedly surging and plunging, he said, stoking fears of margin calls and forced selling.

He added that the biggest victims were retail investors who borrowed money to invest after trusting the government.

Jang also criticized the process behind the introduction of single-stock leveraged ETFs. Calling the products the main culprit in turning the stock market into a gambling arena, he said many experts had warned of the risks from the outset, but the policy was pushed through ahead of local elections.

He also said the move could not have happened without the president’s instruction. The presidential office, the Financial Services Commission and the Financial Supervisory Service should face a thorough investigation into how the products were introduced, he said.

Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com