War-Driven Commodity Bets Send ETN Trading Volume Up Sixfold

Geopolitical risks stemming from Middle East conflicts are rattling global commodity markets, drawing renewed investor attention to exchange-traded notes (ETNs), which had been relatively overlooked.

According to the Korea Exchange, average daily ETN trading volume reached 9.252 million securities from October 1 to 20, approximately six times higher than the 1.577 million recorded during the same period last year. Trading value also more than doubled, expanding from around 4.1 billion won to 10.8 billion won over the same period.

The surge is directly linked to energy price volatility triggered by recent military clashes between the U.S.-Israel coalition and Iran. The Middle East serves as a critical hub for global oil and natural gas supply, and concerns over potential blockades of the Strait of Hormuz—a key shipping route—have driven both hedging and speculative demand for related assets.

ETNs are derivative-linked securities that track underlying index returns and can be traded in real time like stocks, similar to exchange-traded funds (ETFs). However, investor interest has been limited compared to ETFs due to structural risks including exposure to issuer credit risk. While the ETF market approaches 400 trillion won in net assets, the ETN market has remained relatively small.

The war has changed market dynamics. Half of the top 10 ETNs by trading volume this month were oil and natural gas products. The most actively traded product was "Samsung Inverse 2X WTI Crude Oil Futures," with 1.849 billion securities changing hands. It was followed by "Samsung Inverse 2X KOSDAQ150 Futures," "NH Inverse Leverage WTI Crude Oil Futures (H)," and "Samsung Leverage WTI Crude Oil Futures."

Average daily trading volume for "Samsung Inverse 2X WTI Crude Oil Futures" surged more than fivefold year-over-year to 132.07 million securities. By trading value, "Samsung Inverse 2X KOSDAQ150 Futures" led with 776 billion won.

Market observers expect investment demand for energy and commodities to persist regardless of whether the conflict extends. While some anticipate a ceasefire, analysts note that supply disruption concerns will not easily dissipate given the damage already inflicted on production facilities.

"Maritime blockades can be normalized quickly once lifted, but destruction of plants and infrastructure leads to prolonged recovery delays," said Lee Dong-wook, a researcher at IBK Investment & Securities. "Significant time lags in resuming war insurance underwriting, normalizing shipping capacity, and restoring port operations could extend volatility in global energy and chemical supply chains."