LEE MING: IT WILL TAKE TIME AFTER THE SOUTH KOREAN STOCK MARKET HAS SOARED TO URGE REGULATORS TO DEAL WITH THE LEVERAGE ETF DISPUTE

ON 15 JULY, PRESIDENT LEE YINGMING OF THE REPUBLIC OF KOREA STATED THAT IT WOULD TAKE TIME TO RESTORE STABILITY AFTER A SUBSTANTIAL INCREASE IN THE KOREAN STOCK MARKET IN A SHORT PERIOD OF TIME. IN A POLICY MEETING WITH SENIOR GOVERNMENT OFFICIALS IN SEOUL ON WEDNESDAY, LEE SAID: “THE DOMESTIC STOCK MARKET IN KOREA IS CURRENTLY QUITE UNSTABLE. AS MARKETS HAVE EXPERIENCED UNPRECEDENTED AND DRAMATIC INCREASES IN SUCH A SHORT PERIOD OF TIME, TIME AND A DEGREE OF VOLATILITY ARE NEEDED TO STABILIZE.” LEE ACKNOWLEDGED THE RECENT CONTROVERSY OVER LEVERAGE ETF AND URGED THE KOREAN FINANCIAL SUPERVISORY AUTHORITY AND THE KOREAN EXCHANGE EXECUTIVES TO DEAL WITH THE RELEVANT ISSUES QUICKLY AND TO DEVELOP A FOLLOW-UP RESPONSE. MARKETERS EXPECT THAT REGULATORS WILL BE ABLE TO CONTAIN THE IMPACT OF SUCH HIGH-RISK PRODUCTS ON MARKET STABILITY, INCLUDING A POSSIBLE INCREASE IN INVESTMENT LEVERAGE ETF MINIMUM BOND REQUIREMENTS. ON TUESDAY, SOUTH KOREA’S LARGEST OPPOSITION NATIONAL FORCE PARTY ACCUSED LEE OF SETTING AMBITIOUS STOCK MARKET GOALS WHILE IGNORING THE ACCUMULATED LEVERAGE RISK, THUS ENCOURAGING EXCESSIVE RISK-TAKING. KIM XIAN