SEOUL, July 29 : Top South Korean policy makers apologised on Wednesday over the introduction of single-stock leveraged exchange-traded funds (ETFs), which have been blamed for intensifying a rout in the country’s stock market.
Finance Minister Koo Yun-cheol said he was sorry for introducing the product without careful consideration, responding to a lawmaker’s demand for an apology during a parliamentary session.
At another parliamentary session, the country’s top financial regulator made similar comments, after several lawmakers criticised the release of the funds for exacerbating a sell-off in South Korean equities this month.
“As the ultimate authority responsible for the financial markets, we feel sorry that we have fallen short in properly meeting the public’s expectations” over regulating the product, Lee Eog-weon, chairman of the Financial Services Commission, told the hearing.
The apologies came as the benchmark Kospi plummeted as much as 12.6 per cent on Wednesday, led by losses in South Korean chip stocks Samsung Electronics and SK Hynix which together account for nearly half of the index’s market capitalisation.
The regulator’s approval of single-stock leveraged ETFs has come under fire as South Korean retail investors pumped money into the product, mostly tied to Samsung or SK Hynix, betting on no let up in robust demand for artificial intelligence.
Shares of Samsung Electronics fell as much as 14 per cent on Wednesday in Seoul trading. SK Hynix plunged as much as nearly 20 per cent, despite reporting record earnings.