People Power Party Supreme Council member Kim Jae-won. [Yonhap]
People Power Party Supreme Council member Kim Jae-won. [Yonhap]

People Power Party Supreme Council member Kim Jae-won said Monday that he once earned 200 million won ($135,000) in unrealized gains from Samsung Electronics shares, only to lose all of it after the introduction of single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix.

Kim made the remarks at a PPP Supreme Council meeting at the National Assembly in Yeouido, Seoul, calling the Kospi "not an investment market but a gambling den."

"Personally, I hold Samsung Electronics shares and at one point had unrealized gains of 200 million won," he said.

He went on to say that the introduction of single-stock leveraged ETFs based on Samsung Electronics and SK Hynix had created serious problems by exploiting the fear of missing out among retail investors. "The Kospi, which had been trending upward, has seen its volatility grow day by day — sidecars have been triggered 37 times this year alone. The market is more unstable than it was during the 2008 global financial crisis," he said.

Kim also criticized the response measures for leveraged ETFs that Kim Yong-beom, the presidential policy chief, had outlined in a recent broadcast appearance.

"Raising the deposit requirement, extending education hours and lowering the tracking error to 1 percent — that is the entirety of it, and the industry sees these as useless measures," Kim said. "He himself said delisting would be difficult, so nothing gets resolved."

He went on to say that the industry was calling for a reduction in the leverage multiplier. "The current two-times tracking structure should be lowered to 1.5 times or below, and a delisting road map must be announced. A phased reduction schedule needs to be drawn up," he said.

Kim then turned his fire on Kim Yong-beom, Deputy Prime Minister Koo Yun-cheol — who also serves as finance minister — and Financial Supervisory Service chief Lee Chan-jin, saying the Korea Exchange in Yeouido had become "a worse gambling den than Kangwon Land." He argued that "those who created this gambling den should be punished for operating an illegal gambling establishment and for abetting gambling."

Closing his remarks, Kim said he had good news for those who had felt a pang of envy when he mentioned his 200 million won gain. "After the Samsung-Hynix leveraged ETFs were introduced, I blew through every last won of that 200 million," he said.

Meanwhile, under supplementary measures financial regulators announced Thursday, the minimum deposit required to invest in single-stock leveraged products will rise from 10 million won to 30 million won. Trading-volume requirements will also be tightened: investors will no longer be able to buy or sell shares one at a time and must instead trade in lots of 20.


min3654@heraldcorp.com