▲ Lee Chan-jin, governor of the Financial Supervisory Service (Yonhap)

watchdog chief-leveraged ETFs

Watchdog chief voices concerns over retail speculation amid increased volatility

SEOUL, May 19 (Yonhap) -- The chief of the country's financial watchdog has expressed concerns that retail investors could suffer losses amid increased market volatility, according to the Financial Supervisory Service (FSS) on Tuesday.

During a meeting on consumer risk response a day earlier, FSS governor Lee Chan-jin said retail investors could increasingly pivot toward highly volatile, risky assets as the country is set to introduce single-stock leveraged, or inverse, exchange-traded funds (ETFs) next week.

Single-stock leveraged, or inverse, ETFs are allowed to provide up to twice the daily performance of an underlying stock.

Retail investors have been pouring into leveraged ETFs, one of the key factors sending the country's stock market to record highs.

Backed by a strong buying spree by retail investors, the country's benchmark Korea Composite Stock Price Index (KOSPI) has rallied by more than 70 percent so far this year following last year's 76 percent advance, becoming the best performer among major markets.

The introduction of single-stock leveraged ETFs could further accelerate capital flights to high-risk financial products, the watchdog said.

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