Speaking at a Cabinet meeting, Lee pointed to the divided views over leveraged ETFs linked to Samsung Electronics and SK hynix, which were introduced in late May when both semiconductor giants were enjoying a powerful rally that had helped propel the benchmark KOSPI to record highs.
The president said the products had helped keep domestic capital from flowing overseas but had also amplified market volatility.
Financial Services Commission Chairman Lee Eog-weon defended the products, saying similar single-stock leveraged ETFs are widely available in overseas markets and were introduced as part of efforts to advance South Korea's capital market.
"They nonetheless have become a source of grievance for investors, haven't they?" President Lee replied.
He said public criticism was increasingly being directed at the government because the ETFs were launched near the peak of the semiconductor rally before sharp declines inflicted heavy losses on retail investors.
Calling for authorities to consider "various factors," Lee instructed regulators to prepare comprehensive measures to stabilize the market and better protect investors while reviewing the role of such high-risk investment products.
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