Ahn Cheol-soo calls for delisting of leveraged Samsung-Hynix ETFs, removal of financial regulators

People Power Party lawmaker Ahn Cheol-soo said leveraged exchange-traded funds tracking Samsung Electronics and SK hynix — commonly known as "Samjeon-nix leverage ETFs" — represent "a complete policy failure" and called for strong corrective measures, including delisting.

Ahn made the remarks Sunday on his Facebook page, saying "the Kospi has become a casino" because 212 trillion won ($136 billion) had poured into the leveraged ETFs, amplifying share price volatility.

"The Kospi is already top-heavy, with Samsung Electronics and SK hynix alone accounting for 60 percent of total market capitalization," he said. "Layering leverage on top of that causes the market to lurch from daily rebalancing and arbitrage attempts — the Kospi fear index has soared to a record 90.8."

Ahn also said the funds had failed to achieve their original goals of drawing overseas investment back to Korea and defending the exchange rate. Of the 11 trillion won invested in the leveraged products through Hong Kong markets, only 500 billion won had flowed into Korea, he said, while the won-dollar rate was hovering above 1,550 won.

He added that investors were also losing money due to the "negative compounding effect" inherent in leveraged products, noting that all 14 Samjeon-nix leverage ETFs had posted negative returns over the past month, with the worst loss reaching 35.9 percent.

"The Samjeon-nix leverage ETFs have been a complete policy failure. They are eating away at corporate value and public wealth by trillions of won a day," Ahn said. "Strong corrective measures, including delisting, are needed to restore market order."

He also proposed banning single-stock leveraged products and easing regulations on active ETFs currently bound by a 0.7 correlation coefficient requirement, calling it the more rational approach.

Ahn directed criticism at President Lee Jae Myung, saying the heads of the Financial Services Commission and the Financial Supervisory Service should be held accountable and removed from office. "Investors agonize every day watching their portfolios melt away, yet both chiefs have failed on outlook, response and contingency planning alike," he said. "Why are we just standing by while irresponsible officials cling to their posts and wait to see which way the wind blows?"

He warned that if the current "roller-coaster Kospi" trend continued, Korean markets would come to be treated as unpredictable penny stocks in global markets. "Time is running out," he added.