Leveraged ETFs: The Volatility Culprit Acknowledged by the BOK

Subsequently, the growth rate is expected to decline slightly in the second half of the year and the first half of 2027, then rebound from the second half of 2027.

The increase rate of household loans is also projected to continue rising in 2026, not decreasing, which will likely act as a pressure point for interest rate hikes.

Rent (monthly/jeonse) is not included in South Korea's Consumer Price Index (CPI) items. In contrast, in the U.S. CPI, rent accounts for over a quarter of the total index as a major item. Due to this difference, concerns are being raised that South Korea's official inflation indicators may not fully reflect actual inflationary pressures, and the term 'financial stability' mentioned by the Bank of Korea is interpreted as an indirect reference to housing price-driven inflation.

Statements from Bank of Korea officials also reveal concerns about rising inflation and household debt, with an implicit meaning that the possibility of an interest rate hike is not ruled out.

This implies that while it is premature to definitively state an interest rate hike, the possibility remains open depending on inflation conditions. Particular attention is being paid to the impact of the Middle East situation on international oil prices and domestic inflation.

This is interpreted as a 'policy mix' strategy to alleviate difficulties for vulnerable groups due to interest rate hikes through financial support.

The size of Samsung Electronics' leveraged ETFs surged from $3.3 billion to $10.7 billion in just one month, appearing to be a factor in increasing market volatility.

During a past period when the KOSPI index surged from 6,000 to 9,000, large-cap stocks like Samsung Electronics and Hynix were analyzed to contribute 99% to the index's rise. This is the background for single-stock leveraged ETFs being identified as a major cause of market distortion.

Since July, the net buying of NDFs (Non-Deliverable Forwards) has reversed, leading to a shift from a strong dollar-weak won trend to a weak dollar-strong won trend. Foreign investors' net selling of 93,173 currency futures contracts in a single day has fueled this trend. Consequently, the government and the Bank of Korea are moving to defend against a rapid appreciation of the won.

Furthermore, news has emerged that Foxconn is facing difficulties in production due to issues with the yield of liquid metal for the hinge, potentially causing initial supply disruptions.

This indicates that Apple is employing a strategy of adjusting price fluctuations to maintain high profitability.

This measure is in response to severe power shortages, with construction slated to begin in Q1 2025 and completion targeted for May 2028. Notably, power generation engines previously used for ships have proven highly effective in meeting onshore power generation demands.

The cancellation, valued at approximately 37 billion won, represents a significant portion of its market capitalization. Immediately following the announcement of this treasury stock cancellation, Sempio's stock price hit its daily limit the next morning, a result of the maximized impact of the cancellation decision on the stock price, typical for low-volume stocks.