South Korean President Lee Jae-myung (이재명) said policy support was not sufficient in the process of introducing single-stock leveraged exchange-traded funds (ETFs).

At a news conference at the Blue House on Sept. 18, Lee said of single-stock leveraged ETFs, "It seems true there were shortcomings in the policy." He added, "I think there may have been some instability in government policy."

He said he has not yet identified all of the detailed decision-making process behind the product launch. He added that he had been briefed at the time, and that the rationale was that the products were needed for foreign exchange market stability and to encourage domestic investment.

Lee said the policy direction itself was valid, but explained that unexpected problems emerged because the products were launched late in a stock market upswing.

He said large-scale buying flowed into single-stock leveraged products and then the market turned downward, doubling investors' losses.

He also mentioned that investor protection mechanisms should have been sufficiently 마련ed from the product launch stage rather than through after-the-fact regulation.

Lee said it is difficult to accurately predict whether stock prices will rise or fall, but added, "It is possible to criticise that it would have been fine if everything that needed to be supplemented later had been installed in advance."

Single-stock leveraged products were designed to track twice the daily percentage change in the share prices of individual stocks such as Samsung Electronics and SK Hynix.

On May 27, eight asset management firms listed 16 ETFs and Mirae Asset Securities listed two exchange-traded notes (ETNs), introducing the products to the domestic market for the first time. The Financial Services Commission urged investor caution at the time, saying the products were high-risk with a higher potential for losses than general ETFs.

After trading rose quickly mainly among retail investors following the launch, financial authorities added investor protection measures.

From July 31, the required basic deposit for individual general investors trading single-stock leveraged ETFs and ETNs was raised to 30,000,000 won in cash from the previous 10,000,000 won. Rules were also tightened so that substitute securities such as stocks, ETFs and bonds would not be recognised as the basic deposit.

Lee said of the situation after tightened regulation, "Now it is in a state where it is almost not a problem." He added that he understands corrective and supplementary measures were taken as losses and criticism grew among investors who bought the products at the time.