"I Earned 200 Million Won But Lost It All": Jaewon Kim Directly Criticizes 'Samsung Electronics and Hynix Leverage'

"Need for a Phased Delisting Schedule"

Jaewon Kim, Supreme Council Member of the People Power Party, revealed that he gave back unrealized gains of up to 200 million won after the introduction of leveraged Exchange-Traded Funds (ETFs) for Samsung Electronics and SK hynix. He stressed the need for a roadmap for the delisting of single-stock leveraged ETFs.

Kim Jaewon, Supreme Council Member of the People Power Party. Photo by Yonhap News Agency

On July 20, during a Supreme Council meeting at the National Assembly, Kim stated, "Our country's KOSPI has risen steadily over the past several years, increasing from 2,500 to 9,000 points. As a result, many people made money through stocks and this has become a factor drawing more people to invest in the market. I personally hold a small amount of Samsung Electronics and have once earned unrealized gains of 200 million won," he said.

He continued, "Amidst this, with the intention of giving those in a FOMO (Fear of Missing Out) state a chance to catch up, leveraged ETFs for single stocks such as Samsung Electronics and hynix were introduced, but this is causing significant problems. KOSPI, which had previously trended upwards, is now experiencing increasing volatility by the day. This has become a reason for foreign investors to exit the market," he pointed out.

He added, "After the introduction of the leveraged ETFs for Samsung Electronics and hynix, I did nothing, and yet I ended up completely losing the 200 million won in gains."

Kim went on to explain, "The sidecar was first introduced in 1996, but it began to be triggered from 2002. Over the past 24 years up to last year, it has been activated roughly 60 times. Of those 60 times, 26 were in 2008 during the global financial crisis; for the remaining 23 years, it was generally triggered once or twice a year."

He further stated, "This year alone, the sidecar has been activated 37 times. Moreover, since these leveraged ETFs were listed in June, there were 10 activations just in June. That means once every two days out of 20 trading days. In July, out of 12 trading days—13 including today—the sidecar was triggered 8 times, which is nearly twice every three days."

Kim also pointed out, "We also need to consider the structural background. Eighty-five percent of the KOSPI's gains came from Samsung Electronics, hynix, and two other stocks. The share of these four stocks in the KOSPI increased from 39% to 61%. On top of this, leveraged products were added, so if even those two stocks fluctuate, Korea’s KOSPI index swings wildly as a result."

Kim criticized the government measures related to single-stock leveraged ETFs as insufficient. He said, "All they are doing is raising the deposit requirement from 10 million won to 30 million won, increasing education hours, and lowering the deviation rate standard by 1%. The industry calls these 'useless measures' and says, 'They have no understanding of the actual market situation.' In fact, 60% of transactions in these products are from foreigners and institutions, yet the measures target only individual investors. How can this be effective?" he asserted.

Additionally, Kim emphasized, "A delisting roadmap must be announced," and stressed, "A schedule for phased reduction must be established."

This content was produced with the assistance of AI translation services.