Trading in single-stock leveraged ETFs 7trading days, 58trillion won, while individual investors' net purchases totaled 7trillion4billion won
An analysis has found that single-stock leveraged ETFs exhibit a 'short gamma' characteristic that triggers a barrage of selling in falling markets and increases index volatility. 7trading days (5month 27day–6month 5day), the cumulative trading value of leveraged 14single-stock products totaled 58trillion won, while individual investors' net purchases amounted to 7trillion4billion won.
An analysis by the financial investment industry has pointed out that single-stock leveraged exchange-traded funds (ETFs) are increasing selling pressure in falling markets. The explanation is that these products exhibit a 'short gamma' characteristic during declines, which can lead to a barrage of selling. The analysis assessed that this structure had increased index volatility.
According to the tally, 5month 27through 6month 5day, over 7trading days, the cumulative trading value of leveraged 14single-stock products reached 58trillion won. During the same period, individual investors' net purchases were tallied at 7trillion4billion won. The tally focused on single-stock leveraged ETFs.
A similar trend was also observed overseas. A Samsung Electronics 2times leveraged ETF listed in Hong Kong (07747 HK) recorded a trading volume of 2trillion5billion won this year, while an SK hynix 2times leveraged ETF (07709 HK) recorded 2,560billion won. The expansion in trading of these two products was also confirmed in international markets.
The analysis explained that the structural characteristics of leveraged ETFs amplify selling pressure during sharp declines. It assessed that these ETFs may lead to sales of the underlying assets during periods of steep declines in the underlying stock prices. It pointed out that structural selling could trigger additional volatility in the index.
The financial investment industry believes that the concentration of trading value and retail buying in single-stock leveraged ETFs over a short period intensified the market impact. This tally included both products listed in South Korea and products listed in Hong Kong. The tally period and amounts are figures based on the criteria used for the tally.
Sources: 연합인포맥스
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