Individual Stock ETFs Causing Major Shocks in Korean Stocks? Taiwan Stock Exchange: Taiwan Not Considering Opening Up

(CNA) - Recent sharp fluctuations in Korean stocks, which have triggered circuit breakers multiple times, have led the market to point fingers at 2x leveraged ETFs linked to major individual stocks like Samsung Electronics and SK Hynix. The Taiwan Stock Exchange stated that considering Taiwan's market conditions, investor trading and protection, and the characteristics of the ETF market, it is currently not considering opening up individual stock ETFs.

The Taiwan Stock Exchange explained the differences between the Taiwanese and Korean markets. Taiwan currently does not have leveraged individual stock ETFs. Taiwan's current leveraged and inverse ETFs primarily track indices, reflecting the short-term trends of the broader market or specific market indices, rather than concentrating on a single stock.

Secondly, the Taiwan Stock Exchange stated that South Korea has a daily price fluctuation limit of up to 30% for single stocks. In contrast, Taiwan's stocks and ETFs have a daily price fluctuation limit of 10%, indicating relatively cautious risk management.

The Taiwan Stock Exchange emphasized that Taiwan's ETF product design and market supervision are different from South Korea's, and therefore, the market will not experience situations like Korea, where ETFs lead to market crashes.

Korea opened up leveraged ETFs linked to Samsung Electronics and SK Hynix in May, attracting significant capital inflows. Lee Chan-jin, Governor of the Financial Supervisory Service (FSS) of Korea, recently publicly admitted that the government's approval of leveraged funds linked to the country's most well-known chip stocks was hasty and exacerbated market volatility. (Editor: Pan Yi-ching) 1150629

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