[Kwangsoo's Take] Leveraged ETFs Need an Immediate Trading Halt, Not More Debate
Host Lee Kwang-soo argued that leveraged and inverse ETFs are excessively amplifying market volatility, and that regulators should halt trading first and debate solutions afterward, since the market could deteriorate further while discussions drag on. He described the world's fifth-largest market swinging 7-8% intraday as effectively a gambling floor, distorting how fundamentals and news are reflected in prices.
He specifically pointed to a structural incentive to game the market: an investor who sells a large block of the underlying stock while simultaneously buying inverse-leveraged products profits more as the sell-off deepens. He noted evidence that foreign investors' recent net selling has coincided with buying of leveraged products, suggesting this dynamic may already be at play.
His deepest concern was that repeated volatility could push retail investors back toward viewing Korean equities as a gambling table, eroding the healthy investing culture built up in recent years. He also noted that derivative trading volume in Korea vastly exceeds underlying-stock volume compared to markets like Nasdaq, arguing regulators should suspend trading immediately and address legal gaps and investor compensation afterward.
At the same time, he stressed that this structural issue doesn't undermine the fundamentals or growth stories of Korea's leading companies, urging investors not to panic-sell. He advised against overextending into new positions and recommended setting a predetermined loss threshold with a disciplined stop-loss plan.