Blue House policy office chief Kim Yong-beom said recent South Korean stock-market declines are driven by broad structural factors rather than just leveraged ETFs [1].

This assessment suggests the government may pursue a wider range of regulatory interventions beyond specific financial instruments to stabilize the national economy. The remarks come as investors grapple with heightened volatility in the domestic market.

Speaking in Brazil during President Lee Jae-myung’s state visit, Kim said the Financial Services Commission and the Financial Supervisory Service will examine the current market situation [1]. He said the market has experienced significant volatility over the last two to three months [2].

Kim addressed the debate over whether leveraged ETFs — funds that use debt to amplify gains or losses — are primarily responsible for the downturn. "The decline in stock prices is not just a problem with leveraged ETFs," Kim said [3].

He said regulators must evaluate the overall market environment rather than focusing on a single product. "We must check the general situation, not only leveraged ETFs," Kim said [4].

Despite the volatility, Kim expressed a positive outlook on specific sectors. He said that demand for artificial intelligence is expected to remain stable [5].

The government's focus on structural issues indicates a shift toward analyzing long-term economic trends and systemic vulnerabilities. By involving both the Financial Services Commission and the Financial Supervisory Service, the administration aims to create a comprehensive response to the market instability [1].

“"The decline in stock prices is not just a problem with leveraged ETFs,"”

By attributing market volatility to structural factors rather than specific trading vehicles, the South Korean government is signaling that a simple ban or restriction on leveraged ETFs may be insufficient. This approach suggests that the administration is looking for deeper systemic reforms to protect the market from volatility while attempting to maintain growth in high-tech sectors like AI.