leveraged exchange-traded funds

Trading in leveraged exchange-traded funds tied to South Korea’s two chip giants has shrunk sharply following regulatory measures aimed at curbing demand for the products, which had fueled recent market volatility.

South Korean stocks fell for a third consecutive day as Samsung Electronics Co.'s better-than-expected earnings failed to reassure investors. The government introduced additional measures to restrict demand for leveraged exchange-traded funds, contributing to market uncertainty.

South Korea has moved up the date to lift the minimum cash deposit requirement for leveraged exchange-traded fund investors to July 31, aiming to reduce demand for these products, which are linked to increased stock market volatility.

South Korea will announce measures targeting leveraged exchange-traded funds linked to Samsung Electronics Co. and SK Hynix Inc., which have contributed to increased market volatility. The action aims to address the surge in volatility driven by these financial instruments.

The Bank of England warned that a collapse in the AI stock market could trigger a UK recession, projecting a 2.2% GDP decline. Risks include equity market corrections, slower AI adoption, and uncertainty about long-term winners in the sector, with no new regulations planned to address high valuations.