Forget Mrs Watanabe and her carry trades in Turkey, Indonesia or Brazil; it turns out that South Koreans are the true trading degens of Asia.
MainFT’s Song Jung-a has written a fascinating piece on how South Korean retail investors’ love of leverage and volatility are now even freaking out local financial regulators.
South Korea’s financial regulators have vowed to curb short-term speculation by retail investors, as their bets on tech stocks fuel fears of a market bubble.
Retail investors have made big bets on themes including electric vehicle battery materials, quantum computers and superconductors, making the tech-heavy Kosdaq one of the world’s best performers this year.
“Their investment patterns are highly risky so we are cracking down on leveraged buying and margin call risks,” said Lee Bok-hyun, governor of the Financial Supervisory Service. “They seem to be recently lured by high volatility, which leaves bigger room for strong gains.”
Alphaville has previously written about South Korea’s infatuation with structured equity products known as autocallables — there they are given cool names like Super Lizard, Cobra and Boosters — but we hadn’t appreciated the extent of their embrace of leveraged ETFs as well.