Korea’s ‘double ETF’ boosted volatility in Samsung Electronics and SK hynix
A single-stock leveraged ETF launched in Korea has recently been pointed to as a factor behind the sharp swings in global memory-chip stocks. This product is designed to target returns by multiplying the price movements of the underlying stock, and can amplify volatility both when prices rise and when they fall.2s times
An analysis says a single-stock leveraged exchange-traded fund (ETF) launched in Korea has recently been cited as a factor that intensified the sharp rises and falls in global memory semiconductor stocks. From an investor’s perspective, it is worth noting because the product may be directly linked to greater market volatility.
A single-stock leveraged ETF is designed to track the price movements of one underlying stock by multiplying them.2When the stock price rises, returns are also multiplied2; when it falls, losses are also multiplied2.
Recently, stocks related to memory have swung sharply, increasing volatility. In the process, it was pointed out that trading in leveraged products betting on a single stock had intensified volatility.
Some market participants pointed out that the product’s structure, trading volume, and investor profile could fuel sharp short-term swings. It was also noted that the related trading volume and position changes appeared to have coincided with market movements.
This controversy once again highlighted the fact that the characteristics of leveraged structures can have a major impact on investment results. Investors should check the product structure and closely monitor the flow of trading volume.
Sources: 매일경제 증권
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