SK Hynix's U.S. Listing Drives Proliferation of Leveraged Products

BlockBeats News, July 10th: SK Hynix's U.S. listing has led to a new round of leveraged products landing on Wall Street. Issuers such as ProShares, Leverage Shares, and Rex Shares are preparing to launch products that aim to achieve two times leverage on SK Hynix's ADR, with some also preparing inverse products. According to information on the issuers' websites, at least six products will be launched next week. SK Hynix's leveraged ETF is highly popular in the Korean market.

SK Hynix, Samsung Electronics, and various leveraged products collectively account for more than 70% of the trading volume in the Korean stock market, exacerbating the volatility of the KOSPI index. John Cho, a fund manager at J.P. Morgan Asset Management's Korea Equity Fund, said, "Part of retail investors' activity seems to be increasingly momentum-driven, and the growth of single-stock ETFs has amplified the trading volume and volatility of large-cap stocks. The emergence of leveraged ETFs is not a healthy signal and may indicate late-cycle retail investor behavior." Analysts stated that the concentration of single-stock leveraged products has begun to affect the stocks they aim to track. The new batch of U.S.-listed leveraged ETPs signifies an expansion of daily rebalancing flows, which could exacerbate the already high volatility.