Bank of Korea governor acknowledges insufficient ETF risk warnings

Bank of Korea Governor Shin Hyun-song acknowledged on October 12 that the central bank had not sufficiently warned investors about single-stock leveraged funds linked to Samsung Electronics and SK hynix.

Speaking at a parliamentary audit in Seoul, Shin said the bank had not fully understood the volatility of the domestic stock market and memory semiconductor sector when he discussed the products at a May press conference. The funds were launched that month.

Yonhap reported that financial authorities subsequently tightened access requirements and introduced measures intended to reduce volatility. Shin’s comments acknowledge shortcomings in the earlier warning and do not announce compensation or a new restriction.

His assessment of interest rates was more positive. The bank raised its benchmark to 3% at consecutive meetings in July and August. Shin argued that acting early had bought time to respond to financial risks, while acknowledging the costs of higher rates.

The bank’s report to the National Assembly forecast growth of 3.3% in 2026 and 2.9% in 2027, supported by semiconductor exports and improving domestic demand. Gross domestic income grew 13.2% in the first quarter and 15.7% in the second, compared with 3.5% in the final quarter of 2025.

The bank said inflation was likely to remain above its 2% target. Core inflation, excluding energy and food, had risen nearly 3% in recent months amid Middle East-related supply disruptions.

Shin also promised better measurement of overseas AI subscriptions. First-half intellectual property services recorded a $6.4 billion deficit and $8.9 billion in software copyright payments. Current statistics include AI fees without separating them.

The next rate-setting meeting is October 22. The report says the bank will assess inflation, economic conditions and financial stability before deciding the timing and pace of additional increases.