Wall Street firms in New York are preparing to launch leveraged exchange-traded funds (ETFs) linked to SK hynix's American depositary receipts (ADR).
According to Bloomberg on the 10th, U.S. asset managers including ProShares, Leverage Shares, and Rex Shares are preparing to launch leveraged ETF products tied to SK hynix ADR. According to the firms' websites and other sources, more than six leveraged ETF products are set to launch by next week. Some firms are said to be preparing inverse products. Inverse products bet on a decline in the price of the tracked stock.
A leveraged ETF tracking SK hynix as a single stock was previously launched in Hong Kong. The single-stock leveraged SK hynix ETF launched by Hong Kong-based asset manager CSOP grew into the world's largest single-stock leveraged ETF, at one point managing more than $16 billion (about 24 trillion won) in assets. Single-stock leveraged products have been pointed to as a main cause of the extreme stock price volatility in the domestic market centered on Samsung Electronics and SK hynix. If related products are launched in the United States, a similar phenomenon could occur on the New York stock market as well.
That day, Kim Yong-beom, head of the Presidential Office of Policy, said in a Presidential Office briefing that the government is reviewing the impact of single-stock leveraged ETFs. "We plan to closely examine the market impact at a market situation review meeting involving the Ministry of Economy and Finance, the Financial Services Commission, the Bank of Korea, and the Financial Supervisory Service," Kim said. "If supplementary measures are needed, I think a decision will likely be reached through discussion at this meeting."
