Kim Yong-beom, chief policy secretary at the presidential office, answers a question from President Lee Jae Myung at a Cabinet meeting held at Cheong Wa Dae on July 21. [Yonhap]
Kim Yong-beom, chief policy secretary at the presidential office, answers a question from President Lee Jae Myung at a Cabinet meeting held at Cheong Wa Dae on July 21. [Yonhap]

As volatility in South Korea's stock market intensifies, opposition parties have trained their fire on the government's market policies, demanding the dismissal of presidential policy chief Kim Yong-beom and calling for a parliamentary investigation. The government drew a line against accusations of policy failure, attributing the turbulence to a combination of domestic market characteristics and global volatility in the semiconductor and AI sectors.

According to political sources Saturday, a retail investor group called the "Assembly for Stock Market Normalization" recently lined up funeral wreaths in front of the National Assembly demanding the abolition of single-stock leveraged ETFs tied to Samsung Electronics and SK Hynix. The group argues that the products have amplified share price volatility and sown confusion in the market.

Amid a string of share price declines and mounting concerns over market volatility, the opposition has moved to demand Kim's dismissal and a parliamentary investigation. People Power Party leader Jang Dong-hyeok criticized the situation at a supreme council meeting on June 30, saying, "Politics has turned into an odd-or-even gambling den," and adding, "This goes beyond mere misgovernance — it has come close to criminal conduct that warrants a parliamentary investigation and a special prosecutor."

Floor spokesperson Choi Eun-seok said in a statement Thursday that "if retail investors have suffered losses amounting to 56 trillion won ($38.9 billion), who is on the other side pocketing the gains?" She added that "suspicions are growing that foreign speculative capital has been raking in enormous profits."

Reform Party leader Lee Jun-seok, speaking at a supreme council meeting Wednesday, linked the stock market plunge to Kim's conduct, saying, "The solution is to dismiss policy chief Kim Yong-beom, whose careless remarks have added to market instability." He added, "Even horse racing is required to return at least 73 percent of collected bets to participants, yet the individual-stock leverage products the government opened up in May have no floor."

Lee then said the government had also raised the ceiling on the national pension fund's domestic equity allocation from 14.9 percent to 20.8 percent, and that the fund had used up that additional room while the index was rising. "If the people's retirement savings were used ahead of an election to prop up share prices, that is playing with fire," he said. "The stock market is just the beginning — the national pension is next."

Kim, for his part, said on June 29 in response to the recent swings in domestic equities that "it is not just leveraged ETFs — the overall situation needs to be reviewed," and assessed that "the large swings over the past two to three months were not unique to our market."

He said the market was being affected by "the ongoing debate over the direction of semiconductor and AI stocks as a whole," and explained that "when a move of around 10 occurs at the center of volatility, it shows up as 20 to 30 here in Korea — that is amplified by the characteristics of our market."

On those domestic market characteristics, Kim said that while "leveraged ETFs may make this phenomenon appear more pronounced, that is not necessarily the case," and that "it is time to take a serious look at the heavy weight of derivatives in Korea's market, the large number of retail investors and their dynamic trading behavior, and the overall composition of the investor base."


mp1256@heraldcorp.com