South Korea will take steps to curb stock market volatility, the finance minister said on Tuesday, amid signs of a slowdown in retail investment in single-stock leveraged exchange-traded funds.
A cap that could limit such ETFs to 20 percent of an individual's total investment assets was among additional curbs South Korea adopted last week after initial measures two weeks earlier failed to cool a retail boom in the risky investment products.
Authorities will also swiftly enforce the measures unveiled on Thursday to curb use of single-stock leveraged ETFs, Finance Minister Koo Yun-cheol told a cabinet meeting televised live.
Daily trading volume in such ETFs has fallen since last week's measures, to 560 billion won (US$390.49 million) on Monday in the KODEX SK Hynix single-stock leveraged ETF versus Friday's 1.3 trillion won, itself down more than half from the previous day.
In the case of the KODEX Samsung Electronics single-stock leveraged ETF the volume of daily trades also fell to 234 billion won on Monday, from 511 billion on Friday and 1.4 trillion on Thursday, Korea Exchange data shows.
"It seems to have contributed to a decrease in daily volatility in the KOSPI market to some degree," said Han Ji-young, an analyst at Kiwoom Securities, while adding that more time was required to make an assessment.
Trading volume in such ETFs fell sharply to 6.6 percent of KOSPI market trading on July 31 and 5.4 percent on August 1, from 33.4 percent on July 30, he said.
Trading volume for the two ETFs, the two most heavily invested ones among a dozen listings, hit the highest in late June at 7.4 trillion won and 3.6 trillion won, respectively.
Reuters
