South Korea's Finance Minister, Koo Yun-cheol, issued a public apology on Wednesday for the hasty approval of single-stock leveraged exchange-traded funds (ETFs) earlier this year, which led to substantial losses for retail investors trading on margin.

Data from KB Financial Group shows that since the launch of single-stock leveraged ETFs on May 27, South Korean retail investors aggressively entered the market, with net purchases reaching 14 trillion won ($9.7 billion). Foreign investors net purchased approximately 2 trillion won. This speculative trading frenzy briefly propelled South Korea's stock market to be among the strongest performers globally.

However, as chip stocks weakened, the Korea Composite Stock Price Index (Kospi) experienced a sharp correction, causing many investors to suffer heavy losses. Those who bought single-stock leveraged ETFs tracking chip giants Samsung Electronics and SK Hynix were particularly hard hit. These stocks had previously surged due to the artificial intelligence-driven semiconductor boom.

According to LSEG data, the KODEX SK Hynix Single Stock Leveraged ETF, which aims to double the daily returns of SK Hynix shares, has fallen more than 80% from its peak on June 23. A similar leveraged ETF tracking Samsung Electronics has dropped nearly 75% from its high on June 3.

The Kospi index had experienced a sharp rally but then abruptly stalled. Due to growing concerns about chip stocks, the index has fallen nearly 35% over the past month. In recent weeks, investor anxiety has hit the Kospi's heavyweight stocks, reversing the broader market's trend.

On the same day, Financial Services Commission Chairman Lee Eog-weon stated that regulators are considering restricting ordinary investors from trading such products, allowing only professional investors to participate.

Speaking at a parliamentary committee hearing in Seoul, Lee Eog-weon said, "If necessary, the investment threshold can be raised to be open only to professional investors." He added that if lawmakers complete the relevant legislative groundwork, regulators could lower the leverage ratio for single-stock leveraged products.

"The risk of double tracking leverage is too high, and lowering the leverage ratio is expected to help stabilize market volatility," Lee Eog-weon noted. He also said, "While reviewing the relevant bills, we will also study how to fully consider investor demands, such as by listening to opinions through beneficiary meetings."