Single-stock leveraged ETF heightened volatility in SK hynix
Analysis has found that single-stock leveraged ETFs launched in South Korea have intensified the sharp swings in memory semiconductor stocks. Assets under management in single-stock leveraged ETFs, as of month-end 6 exceeded 500billion dollars (about 68trillion won), and have increased 1fold over 2.3years.
Analysis has emerged that single-stock leveraged exchange-traded funds (ETFs) launched in South Korea have increased the sharp ups and downs in memory semiconductor stocks. It is pointed out that volatility rose as investor interest became concentrated in specific stocks.
Assets under management in single-stock leveraged ETFs, as of month-end 6 exceeded 500billion dollars (about 68trillion won), and increased 1fold over 2.3years.
In particular, products using memory semiconductors as the underlying asset have been launched one after another this year. Analysis has emerged that these products are fueling sharp swings in related stocks.
SK hynix 7in 10listed its American depositary receipts, or ADRs, on the U.S. Nasdaq. The share price has fallen about 25% from its peak, but 2025year-end it is still up by more than 3times.
The ADR offering drew subscriptions amounting to 7times the amount offered.
According to financial data aggregates, SK hynix’s recent 20-day annualized stock-price volatility exceeded 110%. Over the same period, the S&P500 volatility was about 15%.
A typical leveraged ETF is designed to track daily returns at 2x or 3x, and when the share price rises it buys more, and when it falls it sells more, repeating the rebalancing process.
There are concerns that this structure has increased volatility in memory semiconductor stocks.
Sources: 뉴시스 경제
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