◆Aju Economy top stories
▷If high-risk leveraged ETFs are introduced, “Korea’s market will heat up even more”
-Last year in Hong Kong and the U.S., leveraged and inverse ETFs tracking individual stocks at 2x or -2x became widely used. In South Korea, regulations have blocked such launches, and they have been cited as a factor behind outflows by retail investors buying overseas assets.
-The government plans to allow high-risk, high-multiple ETFs in South Korea to boost the domestic market and encourage overseas investment funds to return. It is set to issue a legislative notice on Jan. 30 for a revised enforcement decree of the Capital Markets Act.
-Under the deregulation guidelines, eligible underlying stocks will be limited to blue chips by market capitalization. Only products targeting 2x and -2x daily returns will be allowed; 3x products will be excluded.
-Financial authorities expect the move to ease the concentration of ETF investing overseas and to increase trading value and liquidity in the domestic market.
-Concerns remain that speculative trading could increase volatility. Even so, the KOSPI has extended a record rally, breaking above 5,100 for the first time.
◆Key report
▷Don’t let the successor be swayed (say what needs to be said) [Meritz Securities]
-Meritz Securities said it expects the U.S. policy rate cut in 2026 could be possible around June, after Chair Jerome Powell steps down, and it maintained its forecast for two cuts this year to 3.25%.
-At the January FOMC meeting, the Federal Reserve held rates steady despite dissenting views favoring a cut from Governors Christopher Waller and Adriana D. Kugler. The Fed cited lower downside risks to employment and upgraded its assessment of the economy from “moderate improvement” to “solid improvement.”
-Powell said tariff-driven inflation pressure would be temporary and drew a line by saying no one is currently considering a rate hike. Meritz said he is likely to strengthen messaging on monetary policy for the remainder of his term.
-Powell avoided direct comment on controversy over pressure from President Donald Trump and Fed personnel issues, but said in principle that the next Fed chair “should not be swayed by elected power.”
-With markets focused less on the decision itself than on the next Fed chair, Rick Rieder was seen as the leading candidate at about 40% on Kalshi, according to the report.
◆Key disclosures after the close (28th)
▷LG Chem to pay cash dividends of 2,000 won per common share and 2,050 won per preferred share
▷SK hynix to additionally acquire shares of its U.S. subsidiary for 14.428 trillion won
▷Taeyoung Engineering & Construction terminates a 74.3 billion won contract for a Busan small-scale housing redevelopment project
▷Daol Investment & Securities posts 42.3 billion won in net profit last year, marking a fourth straight profitable quarter
▷SK Telecom to dispose of treasury shares worth 3.6 billion won
◆Fund flows (as of the 27th, excluding ETFs)
▷Domestic equity funds: +14.4 billion won
▷Overseas equity funds: +97.7 billion won
◆Key events today (29th)
▷Germany: January GfK consumer sentiment index
▷United States: November trade balance; December PCE price index; December personal income and spending; third-quarter nonfarm labor productivity and unit labor costs
* This article has been translated by AI.
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