Overinvestment in leveraged stocks a risk to households, financial regulator chief says

The head of the nation's financial regulator said Tuesday that excessive leveraged stock investments could undermine the financial health of households, warning retail investors against taking too much risk in a stock rally.

Lee Chan-jin, governor of the Financial Supervisory Service (FSS), made the remarks at a meeting with relevant officials on the protection of financial consumers.

Lee said the financial health of households could be severely undermined "if household financial assets are excessively concentrated in certain assets or invested using leverage beyond tolerable levels."

Lee called for the financial sector to step up its role in risk management and take pre-emptive measures if necessary.

The benchmark Kospi has surged so far this year, thanks to a global spending boom on artificial intelligence data centers, but its volatility has also grown.

Between May 27 and June 22, retail investors bought a net 8.9 trillion won ($5.8 billion) worth of leveraged exchange-traded funds tracking single heavyweight stocks, according to industry data.

Yonhap