The head of South Korea's financial watchdog stated on Tuesday that excessively leveraged stock investments could harm household financial health, cautioning retail investors against assuming excessive risk as the market rises.

The remarks were made by the governor of the Federal Signal (FSS) during a meeting with relevant officials concerning financial consumer protection.

He indicated that household financial conditions could be severely impaired if their financial assets are overly concentrated in specific assets or if investments are made with leverage exceeding acceptable levels.

The governor urged the financial sector to enhance risk management and implement preventative measures when necessary.

This year, the benchmark Korea Composite Stock Price Index (KOSPI) has surged significantly, driven by a global spike in artificial intelligence data center spending, though its volatility has also increased accordingly.

According to industry data, between May 27 and June 22, South Korean retail investors were net buyers of leveraged exchange-traded funds (ETFs) tracking single large-cap stocks, with purchases amounting to 8.9 trillion won (approximately $5.8 billion).