President Lee Jae-myung (이재명) called for additional supplementary steps to reduce market shocks from single-stock leveraged exchange-traded funds (ETFs), which have recently been cited as a cause of sharp swings in the domestic stock market.

At a State Council meeting at the Blue House on Monday, Lee said there were claims that volatility had worsened due to bleeding at global semiconductor subsidiaries. He said he understood the policy intention of preventing an outflow overseas in the first half, but that it ultimately caused sharp surges in rising phases and excessively deepened declines in falling phases.

He pointed out that, from the standpoint of stock market participants, policy inefficiencies and damage were much greater.

Financial authorities have recently unveiled supplementary measures to raise the basic margin deposit for single-stock leveraged ETFs on Samsung Electronics and SK Hynix to 30 million won from 10 million won and to expand the minimum trading unit to 20 shares from 1. The new standards are expected to take effect on Aug. 5.

Lee said of the steps that they appeared to have been aimed at pulling individual investors back into domestic investment assets to prevent them from shifting overseas. He said he understood them as measures prepared to ease volatility.

But he said the current measures alone were insufficient to resolve problems such as rebalancing just before the close and concentration of large-scale trading.

Lee said additional ways were needed to reduce shocks at specific periods and times when the market is shaken. He called for supplementary steps to be prepared on an ongoing basis.

He then again stressed the need for additional market stabilisation measures, saying that reducing damage suffered by stock market participants amid unstable external conditions was ultimately the government’s responsibility.