Kim Eun-hye, a lawmaker from the People Power Party, is exploring the possibility of state compensation for investors who suffered losses from single-stock leverage ETFs linked to Samsung Electronics and SK Hynix, drawing criticism across the political spectrum.
On July 28, Kim's office reported that it is currently gathering cases of losses incurred by investors in these ETFs to assess the scale of the damage. The office is examining whether financial authorities adequately verified the risks associated with the introduction of high-risk products and is considering measures for victim relief, including state compensation claims.
This review was prompted by a policy discussion held on July 21 in the National Assembly titled 'Is Our Stock Market Okay? The Roller Coaster Samsung and Hynix Leverage ETFs.' During the discussion, issues regarding the approval process for these products by financial authorities, the adequacy of investor protection measures, and the potential for state responsibility were raised.
The controversial products are single-stock leverage ETFs that track the stock prices of Samsung Electronics and SK Hynix at double the rate. Following a sharp decline in the semiconductor sector, investor losses have escalated, leading to criticism that financial authorities allowed the launch of high-risk products without adequate protection for individual investors.
As news of the potential state compensation surfaced, online reactions included widespread backlash questioning whether it is appropriate to cover investment losses with taxpayer money. In particular, comments from male-dominated online communities emphasized market principles alongside political criticism. Users expressed sentiments such as, 'Why should we compensate those losses with taxes? I don't understand,' and 'Does it make sense for a conservative party to call for state compensation for investment losses?'
Female-dominated online communities also maintained a critical tone, with users stating, 'Even if the Democratic Party is frustrating, the People Power Party is worse,' and 'Are they competing to see who can get criticized more?' They questioned the rationale behind asking the state to compensate for investment losses, stating, 'This isn't a communist party; it doesn't make sense to ask the state to cover investment losses.'
Despite differing political views, there was a common recognition that 'it is excessive for the state to compensate for investment losses with taxpayer money.' However, some called for a separate investigation into whether financial authorities adequately informed investors about the risks of these high-risk products.
Currently, Kim's office is reviewing investor loss cases and the product approval process by financial authorities, and it remains undecided whether this will lead to an actual state compensation lawsuit.
* This article has been translated by AI.
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