Korea’s ETF clampdown may push leverage demand overseas

As South Korea tightens rules on single-stock leveraged exchange-traded funds, overseas markets are expanding their lineup of leveraged products tied to Korean stocks — and positioning themselves to capture demand from investors seeking alternatives.

The tougher domestic rules are expected to curb trading in Korea-listed products.

But industry officials warn they may also create a “balloon effect,” shifting some retail demand toward the broader range of highly leveraged index and sector ETFs ava ...