South Korea’s top presidential policy adviser, Kim Yong-beom, resigned Monday amid controversy surrounding high-risk investment products linked to the country’s AI chip sector, officials confirmed Tuesday. Kim’s departure followed a major cabinet reshuffle announced by President Lee Jae Myung’s administration, which sought to bolster waning public support by appointing new finance and defense ministers.
Kim submitted his resignation on Monday, which President Lee accepted, according to a presidential spokesperson. The controversy centers on single-stock leveraged exchange-traded funds (ETFs) launched on South Korea’s main stock exchange in late May. These ETFs track shares of leading memory chipmakers Samsung Electronics and SK hynix, both key players in the expanding artificial intelligence market. Introduced under Kim’s oversight, the funds magnify daily stock gains and losses twofold, raising concerns about exposing retail investors to excessive market volatility.
Market observers noted that SK hynix’s sharp share price drop in July was intensified by sell-offs associated with the leveraged ETFs, even as the company’s underlying business fundamentals remained stable. Opposition lawmakers criticized the government for the introduction of such products, and financial regulators expressed regret over their approval. In response, authorities imposed new restrictions, limiting participation to cash buyers who maintain a minimum deposit of 30 million won (approximately $22,000).
President Lee’s approval rating has also declined, dipping below 40 percent for the first time since his June 2025 inauguration, standing at 38.9 percent this week. Analysts attribute the drop to heightened financial market volatility and growing public dissatisfaction with Lee’s real estate policies.
On Tuesday, the South Korean government announced plans to establish a 162.3 trillion won “Future Fund” in 2027. Designed to allocate record tax revenue generated by the chip industry towards sustainable economic growth, the fund will prioritize sectors including youth development, growth industries, regional economies, and education. Kim previously sparked debate in May by proposing the use of excess AI-driven tax revenues as a “citizen dividend” to support startups and young people. Critics cautioned against relying on short-term windfalls for ongoing expenditures, prompting Kim to clarify that his proposal focused on distributing surplus government revenue, not tapping into corporate profits.
The finance ministry emphasized that the Future Fund differs from the earlier proposal by targeting tax revenue streams expected to be sustained over time, rather than relying on temporary surpluses exceeding government forecasts.