[Kwangsoo's Take] Halt Leveraged ETF Trading Now, Debate Later
Host Lee Kwangsoo opened the show by sharply criticizing the fact that most of the day's top-traded names by volume were single-stock leveraged and inverse ETFs rather than actual stocks. Despite a flood of positive overnight news across the semiconductor and AI ecosystem, the index gave back its intraday gains before barely turning positive, a distortion he attributed to leveraged products effectively wagging the market's tail. He noted that leveraged products had even ranked among foreign investors' top net buys over the past 20 sessions, evidence of mechanical, momentum-driven trading rather than fundamentals-based investing.
He criticized regulators for repeatedly floating options such as raising deposit requirements, restricting access to professional investors, or capping daily price swings, without taking any concrete action. Among the possible remedies, he argued the most direct step, an immediate trading halt, should come first, with debate over permanent fixes to follow. He acknowledged that policy discussion takes time but insisted the market cannot be allowed to deteriorate while regulators deliberate.
He pointed to a specific manipulation risk: an investor could buy a stock while simultaneously buying a 2x inverse product, then sell the underlying shares to profit from the inverse leg, a structural loophole he said was an unintended side effect regulators failed to anticipate when the products were introduced. He warned that a market experiencing 7-8% daily swings, a top-five market in the world by size, effectively resembles a casino rather than a functioning capital market.
He said what troubles him most is the erosion of public trust in domestic equities as repeated losses from this volatility push retail investors back toward stigmatizing Korean stock investment. Even so, he urged investors to retain confidence in market and corporate fundamentals, to avoid over-investing or panic-selling, and instead to set a predetermined, tolerable loss threshold and stick to a stop-loss discipline.