Headquarters of two chipmakers, Samsung Electronics, left, and SK hynix / Yonhap
Ahead of the highly anticipated debut of leveraged exchange-traded funds (ETFs) tied to Korea’s two memory chip titans — Samsung Electronics and SK hynix — the country’s financial watchdog is drawing complaints from asset managers by tightening restrictions on promotional campaigns, according to industry officials Tuesday.
The products, set to launch Wednesday, will be the country’s first leveraged ETFs linked to individual stocks. Conventional leveraged ETFs track broader market benchmarks such as the KOSPI 200 or the S&P 500, allowing investors to place amplified bets on the direction of the overall market.
The new funds apply that same structure to single stocks. A total of 16 ETFs will launch, allowing investors to double the daily gains or losses of Korea’s two biggest chipmakers.
That structure makes the products inherently high-risk, as losses can pile up just as quickly as gains. Financial authorities have already introduced safeguards, including mandatory pretrading education.
But they have also gone a step further. The Financial Supervisory Service recently issued guidance to the eight asset management firms behind these ETFs — Samsung, Mirae Asset, Korea Investment Management, KB, Hanwha, Shinhan, Kiwoom and Hana — urging them to avoid marketing activities that could be seen as encouraging speculative trading. The move effectively bars much of the planned marketing, including giveaway events tied to ETF purchases.
Press briefings and investor seminars are still permitted, but firms were told to focus on explaining product structures and investment risks and avoid language that could be interpreted as encouraging trading. The watchdog warned that it would continue monitoring for possible violations.
Some industry watchers said the authorities’ concerns over potential investor losses were understandable, but stressed that decisions ultimately rest with individuals.
“It’s difficult to understand why authorities would approve these products in the name of boosting the competitiveness of the domestic capital market if firms are then prevented from properly promoting them,” one asset management official noted.
But others argued that the tighter oversight was justified, given the market’s heated mood. With retail enthusiasm for Samsung Electronics and SK hynix already running high after the market’s unprecedented rally, leveraged ETFs could further amplify volatility.
“The market has already risen very sharply, and investor interest in the two chip giants is extremely intense right now,” one brokerage official said. “Adding leveraged ETFs on top of that could fuel even greater volatility. It appears the government is trying to put some brakes on the frenzy. Some degree of moderation may be necessary, especially among younger retail investors who are already drawn to high-risk leveraged products.”