South Korea’s president wanted a hot stock market. He got more than he bargained for

{"text":[[{"start":11.06,"text":"Extreme volatility in South Korea’s stock market is exacting a political cost as retail investors nursing heavy losses from last week’s tech sell-off direct their ire at the country’s president."}],[{"start":22.84,"text":"Thousands of investors found themselves in the red and facing margin calls on leveraged positions last week as the Kospi benchmark fell nearly 40 per cent from its June peak amid a global tech rout. South Korea has been one of the world’s most volatile markets as an AI boom fuels bets on the country’s chipmakers."}],[{"start":41.68,"text":"The huge losses now pose a political risk for Lee Jae Myung, whose approval rating dropped to 44.5 per cent on Monday, near its lowest since he took office in June last year, according to polling agency Realmeter. Investors are blaming his administration for feeding a stock market frenzy and hastily approving risky derivative products."}],[{"start":61.68,"text":"“Our chat rooms are filled with criticism of President Lee, and many of our members are pledging not to vote for the ruling party in the next election,” said Jung Eui-jung, head of the Korean Stockholders’ Alliance, a retail investor advocacy group."}],[{"start":75.36,"text":"While the next National Assembly vote is not until April 2028, Shin Yul, a politics professor at Myongji University in Seoul, said retail investor anger might make it “difficult” for Lee’s Democratic Party to win."}],[{"start":87.76,"text":"“By encouraging people to invest in stocks, President Lee has brought this problem upon himself to some extent.”"}],[{"start":94.68,"text":"No other South Korean president has tied their political fate so closely to the stock market as Lee."}],[{"start":100.52,"text":"A self-professed former retail investor, he campaigned on a pledge to have the Kospi reach 5,000 by the end of his presidency in 2030. The index had been trading in the 2,000 range for more than a decade."}],[{"start":null,"text":"

"}],[{"start":112.36,"text":"Lee argued that South Koreans needed to channel more of their wealth away from property and into “productive” investments such as equities. He sought to attract more capital by strengthening minority shareholder protections."}],[{"start":124.52,"text":"“President Lee performed well early in his presidency by introducing investor-friendly revisions to the commercial code,” said Kim Hyung-kyoon, executive director at investment group Tcha Partners."}],[{"start":134.68,"text":"“Boosting the stock market has been one of his biggest achievements, with about a third of the population — around 15mn people — investing in stocks.”"}],[{"start":144.16,"text":"When the Kospi raced far beyond his original goal, helped by record-breaking profits at chipmakers Samsung Electronics and SK Hynix, he remained bullish."}],[{"start":153.44,"text":"“The market has risen faster than I expected, but I still think it is undervalued,” he told a press conference in June, when the Kospi was just below 8,000. It has since plummeted to about 6,000."}],[{"start":null,"text":""}],[{"start":166.52,"text":"His government also liberalised access to riskier products. In late May, regulators approved single-stock leveraged exchange traded funds for the first time. Within weeks, they attracted more than $10bn from investors using them to bet on the price of Samsung and SK Hynix."}],[{"start":183.36,"text":"But as the market turned and investors suffered heavy losses, Financial Supervisory Service governor Lee Chan-jin publicly expressed regret over their introduction and regulators tightened access."}],[{"start":194.48,"text":"Giving brokerages the green light reflected the Lee administration’s desire to expand investor choice, said John Lee, managing editor at consultancy Korea Risk Group. “That blew up spectacularly in the administration’s face.”"}],[{"start":208.16,"text":"The presidential office did not respond to a request for comment. In a cabinet meeting on Tuesday, finance minister Koo Yun-cheol pledged “efforts to fundamentally improve the constitution of the capital market to alleviate stock market volatility”."}],[{"start":222.04,"text":"Realmeter said Lee’s approval rating fell the most among people in their thirties — by 7.4 percentage points last week. A Seoul-based banker said this group was particularly affected by the market because they were investing to eventually buy a home."}],[{"start":234.84,"text":"“Many of them entered the stock market with a lot of leverage and have seen heavy losses,” said the banker, who believed the government fast-tracked leveraged ETF approval to boost the Kospi further."}],[{"start":245.56,"text":"“Of course, individuals should be ultimately responsible for their own investment decisions,” he said. But “many people put special trust in their governments”, meaning the administration was “not fully blameless” for actively encouraging equity investment."}],[{"start":259.02,"text":"A first-time stock investor in her forties, who gave her name only as Yoon, said she was sitting on 9 per cent losses after putting all her savings and her husband’s pension into equities."}],[{"start":268.92,"text":"“I have supported the Democratic Party ever since I gained the right to vote,” she said, but she accused the government of “doing nothing” as the market fell."}],[{"start":276.88,"text":"“Now I am starting to feel that I will not vote in the next election.”"}],[{"start":285.08,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785823824_2683.mp3"}