The main opposition People Power Party on Monday continued its attack on leveraged single-stock exchange-traded funds, with its floor leader accusing the government of fanning speculative investing.
Speaking at the party's Supreme Council meeting on Monday, People Power Party floor leader Rep. Jeong Jeom-sig referred to the ETFs as "government-led 'leading rooms' targeting the public."
The term "leading rooms" refers to stock tip chat rooms that provide advice on stock investments, often in exchange for membership fees. They are illegal if consulting is provided individually, and some have been linked to fraudulent activities.
The leveraged ETFs Jeong mentioned are largely tied to those that track twice the daily performance of Samsung Electronics and SK hynix. The two chipmakers account for more than half of the total Kospi market capitalization.
"It's so obvious that the market will become extremely volatile under such unique conditions," Jeong said. "Eighteen instances of sidecars and 5 circuit breakers were issued from the release through Thursday."
In particular, Jeong condemned Presidential Chief of Staff for Policy Kim Yong-beom for launching the ETFs, calling for Kim's dismissal from office.
"Kim's fiasco is not something that can be dismissed through band-aid measures," he said. "The stock market has now become a coin-flip casino. The National Election Commission violated the public's voting rights, Cheong Wa Dae has infringed on their property rights."
"If the president has even the slightest dedication to fixing the stock market, he must prove it through personnel changes," he added.
Jeong also called Cheong Wa Dae "delusional" for taking credit for the Kospi's rise, claiming that such delusions led to the launch of an "irrational and hasty product."
"Investment returns have almost halved and liquidity stress has spread through the market in a domino effect, creating losses even for those who never invested in the product," Jeong said. In other words, he claimed that problems in one investment product have spilled into the wider market.
shwang9@heraldcorp.com
