As leveraged exchange-traded funds tie increasing scrutiny, JPMorgan Chase CEO Jamie Dimon is pointing to a broader consequence crossed markets.
"Market leverage is beautiful high," Dimon told CNBC successful an question and reply aired connected Wednesday.
"When you person that, you do person a higher chance that thing will disrupt the marketplace successful a speedy measurement and group will get rattled complete it," he said.
Dimon made the comments aft being asked astir the proliferation of leveraged single-stock ETFs that person drawn renewed attraction successful caller weeks.
While Dimon said leveraged ETFs were not his superior concern, he pointed alternatively to broader marketplace leverage.
"Margin indebtedness is the highest it's ever been," Dimon said, adding that not each marketplace leverage is formally classified arsenic separator debt.
Still, Dimon stopped short of predicting a broader marketplace crisis.
"I'm not going to opportunity it's systemically precocious aliases that it's going to origin a disaster, but it's high," he said.
Dimon's comments came arsenic leverage has travel nether renewed scrutiny pursuing 2 caller events.
In South Korea, regulators tightened rules connected single-stock leveraged ETFs, which activity to magnify a stock's regular gains and losses, aft heightened marketplace volatility put the products into the spotlight.
On Thursday, the Kospi scale was 4% little astir midday aft losing astir one-third of its worth from a grounds precocious deed successful June. Shares of Index heavyweights Samsung Electronics and SK Hynix were 6% and 9% lower, respectively.
Separately, the turmoil astatine AI-focused hedge money Situational Awareness underscored really quickly highly leveraged positions tin unravel.
The hedge money mislaid 67% successful July and was forced to waste astir of its nationalist equities portfolio to Ken Griffin's Citadel owed to separator calls.
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Huileng Tan
Huileng Tan is simply a elder newsman based successful Singapore, covering markets, the world economy, commodities, and investing. Her reporting focuses connected really shifts successful money, demographics, technology, and policy are reshaping businesses, wealth, and mundane life astir the world.Since joining Business Insider successful 2021, she has covered everything from commodity booms and investor trends to China's economy, the AI trade, and the forces driving global markets.Before joining Business Insider, she reported for CNBC, Dow Jones, ICIS, and The Wall Street Journal.In 2018 and 2019, she won the Singapore Exchange Orb Awards for Story of the Year – Derivatives for her reporting connected the world commodities and derivatives markets.Reach her astatine [email protected].
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